
 




 
 

UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
 

 
 
FORM 10-K
 
☑ 
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
 
for
the fiscal year ended March 30, 2024
 
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
for
the transition period from __________to _________
 

 
 
Commission
file number 001-40840
 
 

 
RBC
BEARINGS INCORPORATED
(Exact
name of registrant as specified in its charter)
 
  Delaware   95-4372080  (State or other jurisdiction of 
incorporation or organization)   (I.R.S. Employer Identification No.)         One Tribology Center, Oxford, CT   06478  (Address of principal executive offices)   (Zip Code)

 
(203)
267-7001
(Registrant’s
telephone number, including area code)
 

 
 
Securities
registered pursuant to Section 12(b) of the Act:
 
  Title of Each Class   Trading Symbol   Name of Each Exchange on Which Registered   Common Stock, par value $0.01 per share    RBC    The New York Stock Exchange  5.00% Series A Mandatory Convertible Preferred Stock, par value $0.01 per share   RBCP   The New York Stock Exchange 
 
Securities
registered pursuant to Section 12(g) of the Act: None
 
 
 
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐
 
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑
 
Indicate
by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
 
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant
to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). Yes ☑ No ☐
 
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting
company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller
reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
 
  
Large accelerated filer ☑Accelerated filer ☐Non-accelerated filer ☐    
  
Smaller reporting company ☐Emerging growth company ☐    
 
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
 
Indicate
by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report. ☑
 
If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. ☐
 
Indicate
by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
 
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

 

 
 
The aggregate market value of the registrant’s
Common Stock held by non-affiliates of the registrant on September 30, 2023 (based on the September 29, 2023 closing sales price of $234.13
of the registrant’s Common Stock, as reported by the New York Stock Exchange) was approximately $6,809,508,876.
 
As of May
10, 2024, RBC Bearings Incorporated had 29,211,612 shares of Common Stock and 4,600,000 shares of Preferred Stock outstanding.
 

 
 
Documents
Incorporated by Reference:
 
Portions
of the registrant’s proxy statement to be filed within 120 days of the close of the registrant’s fiscal year in connection
with the registrant’s Annual Meeting of Shareholders to be held September 5, 2024, are incorporated by reference into Part III
of this Form 10-K.
 

 Auditor Firm ID: 00042 Auditor Name: Ernst & Young LLP Auditor Location: Stamford, CT

 

 
 


 
 

 
TABLE
OF CONTENTS
 


 
 
Page

PART I
 
 

Item
    1
Business
1

Item
    1A
Risk Factors
8

Item
    1B
Unresolved Staff Comments
16

Item
    1C
Cybersecurity
16

Item
    2
Properties
17

Item
    3
Legal Proceedings
17

Item
    4
Mine Safety Disclosures
17

 
 
 

PART II
 
 

Item
    5
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
18

Item
    6
[Reserved]
20

Item
    7
Management’s Discussion and Analysis of Financial Condition and Results of Operations
20

Item
    7A
Quantitative and Qualitative Disclosures About Market Risk
32

Item
    8
 Financial Statements and Supplementary Data
33

Item
    9
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
66

Item
    9A
Controls and Procedures
66

Item
    9B
Other Information
68

Item
    9C
Disclosure Regarding Foreign Jurisdictions That Prevent Inspections
68

 
 
 

PART III
 
 

Item
    10
Directors, Executive
    Officers and Corporate Governance
 

Item
    11
Executive Compensation
 

Item
    12
Security Ownership
    of Certain Beneficial Owners and Management and Related Stockholder Matters
 

Item
    13
Certain Relationships,
    Related Transactions and Director Independence
 

Item
    14
Principal Accounting
    Fees and Services
 

 
 
 

PART IV
 
 

Item
    15
Exhibits and Financial Statement Schedules
70

 
 
 

Signatures
Signatures
73

 


i
 

 
PART
I 
 
ITEM
1. BUSINESS
 
RBC
Bearings Incorporated
 
RBC
Bearings Incorporated, together with its subsidiaries, is an international manufacturer and marketer of highly engineered precision bearings,
components and essential systems for the industrial, defense and aerospace industries. Our precision solutions are integral to the manufacture
and operation of most machines and mechanical systems, to reduce wear to moving parts, facilitate proper power transmission, reduce damage
and energy loss caused by friction, and control pressure and flow. The terms “we,” “us,” “our,” “RBC”
and the “Company” mean RBC Bearings Incorporated and its subsidiaries, unless the context indicates another meaning. While
we manufacture products in all major categories, we focus primarily on the higher end of the bearing, gearing and engineered component
markets where we believe our value-added engineering and manufacturing capabilities, and application expertise enable us to differentiate
ourselves from our competitors and enhance profitability. We believe our expertise has enabled us to garner leading positions in many
of the product markets in which we primarily compete. With 54 facilities in 11 countries, of which 38 are manufacturing facilities, we
have been able to significantly broaden our end markets, products, customer base and geographic reach.
 
All quantitative data contained in this Annual
Report on Form 10-K (the “Annual Report”) is stated in millions, except for share and per-share data, number of facilities
and their locations, square footage, and headcount.
 
The
Bearing, Gearing and Engineered Component Industry
 
The
bearing, gearing and engineered component industry is a fragmented multi-billion-dollar market. Purchasers of bearings, gearings and
engineered components include producers of commercial and military aircraft, submarine and vehicle equipment, energy equipment, machinery
manufacturers, industrial equipment and machinery manufacturers, construction machinery manufacturers, rail and train equipment manufacturers,
packaging and canning machinery manufacturers, agriculture and mining equipment manufacturers, and specialized equipment manufacturers,
as well as distributors who service the aftermarket for these products.
 
Demand
for bearings, gearing and precision components in the diversified industrial market is influenced by growth factors in industrial machinery
and equipment shipments, and construction, mining, energy, food and beverage, packaging and canning, semiconductor, and general industrial
activity. In addition, usage of existing machinery will impact aftermarket demand for replacement products. In the aerospace market,
new aircraft build rates along with carrier traffic volume worldwide determines demand for our solutions. Activity in the defense market
is influenced by modernization programs necessitating spending on new equipment, as well as continued utilization of deployed equipment
supporting aftermarket demand for replacement bearings, gearing and engineered components.
 
Customers
and Markets
 
We
serve a broad range of end markets where we can add value with our specialty precision bearings, essential systems and engineered components.
We classify our customers into two principal categories: industrial and aerospace/defense. These principal end markets utilize a large
number of both commercial and specialized bearings, gearings and engineered components. Although we provide a relatively small percentage
of total bearings, gearings and engineered components supplied to each of our principal markets, we believe we have leading market positions
in many of the specialized product markets in which we primarily compete. Financial information regarding geographic areas is set forth
in Part II, Item 8, Note 20 of this Annual Report on Form 10-K.
 
Industrial
Market (67% of net sales for the fiscal year ended March 30, 2024)
 
We manufacture bearings, gearing
and engineered components for a wide range of diversified industrial markets, including construction and mining, oil and natural resource
extraction, heavy truck, aggregates, rail and train, food and beverage, packaging and canning, material handling, semiconductor machinery,
wind, and the general industrial markets. Our products target market applications in which our engineering and manufacturing capabilities
provide us with a competitive advantage in the marketplace.
 


1
 

 
Our largest industrial customers
include Caterpillar, Komatsu and Halliburton and various aftermarket distributors including Motion Industries, Applied Industrial, Baldwin
Supply, BDI and Purvis Industries. We believe that the diversification of our sales among the various segments of the industrial markets
and channels reduces our exposure to downturns in any individual segment. We believe opportunities exist for growth and margin improvement
in this market as a result of the introduction of new products, the expansion of aftermarket sales, and continued manufacturing process
improvements.
 
Aerospace/Defense
Market (33% of net sales for the fiscal year ended March 30, 2024)
 
We supply bearings and engineered
components for use in commercial, private and military aircraft and aircraft engines, guided weaponry, space and satellites, vision and
optical systems, and military marine and ground applications.
 
We
supply precision products for many of the commercial aircraft currently operating worldwide and are the primary bearing supplier for
many of the aircraft OEMs’ product lines. Commercial aerospace customers generally require precision products, often of special
materials, made to unique designs and specifications. Many of our aerospace bearings and engineered component products are designed and
certified during the original development of the aircraft being served, which often makes us the primary bearing supplier for the life
of that aircraft.
 
We
manufacture bearings and engineered components used by the U.S. Department of Defense (the “DOD”) and certain foreign governments
for use in fighter jets, troop transports, naval vessels, helicopters, gas turbine engines, armored vehicles, guided weaponry, spaceflight
and satellites. We manufacture an extensive line of standard products that conform to many domestic military application requirements,
as well as customized products designed for unique applications. Our bearings and engineered components are manufactured to conform to
U.S. military specifications and are typically custom-designed during the original product design phase, which often makes us the sole
or primary supplier for the life of that product. Product approval for use on military equipment is often a lengthy process ranging from
six months to six years.
 
Our largest aerospace and
defense customers include the U.S. Department of Defense, Boeing, Airbus, Newport News Shipbuilding, Lockheed Martin, Northrop Grumman,
Raytheon, Blue Origin and SpaceX and various aftermarket distributors including National Precision Bearing and Wencor. We believe our
strong relationships with OEMs help drive our aftermarket sales since a portion of OEM sales are ultimately intended for use as replacement
parts. We believe that growth and margin expansion in this market will be driven primarily by expanding our international presence, new
commercial aircraft introductions, new products, share gains, and the refurbishment and maintenance of existing commercial and military
aircraft.
 
In fiscal 2024, approximately
2% of our net sales were made directly, and we estimate that approximately an additional 9% of our net sales were made indirectly, to
the U.S. government. The contracts or subcontracts for these sales may be subject to renegotiation of profit or termination at the election
of the U.S. government. Based on experience, we believe that no material renegotiations or refunds will be required. See Part I, Item
1A. “Risk Factors – Future reductions or changes in U.S. government spending could negatively affect our business”
of this Annual Report on Form 10-K.
 
Our
two reportable business segments are aligned with the end-markets for our products. Operating results for the segments are evaluated
regularly by our chief operating decision maker in determining resource allocation and assessing performance. The following table provides
a summary of our two reportable business segments:
 


  
 Net Sales and Percent of Sales for the Fiscal Year Ended (amounts in millions)  
 

Segment 
 March
                                            30,
                                            2024  
 April
                                            1,
                                            2023  
 April
                                            2,
                                            2022  
Representative
    Applications

Industrial
      
$1,040.9
67
 
%  
$1,039.0
71
 
%  
$561.4
60
 
%  
●
                                                                              Mining, energy, aggregates, construction, wind equipment     and material handling
●
 Packaging and canning machinery
●  Semiconductor equipment
●  Industrial gears, components and collets

 

Aerospace/Defense 
$519.4
33 
%  
$430.3
29
 
%  
$381.5
40
 
%  
●
                                                         Airframe control and actuation 

●  Aircraft engine controls and landing gear
●  Missile launchers
●  Radar and night vision systems
●  Hydraulics and valves
●  Space applications 


 


2
 

 
Products
 
Bearings,
gearing and engineered components are employed to perform several functions including reduction of friction, transfer of motion, carriage
of loads, and control of pressure and flows. We design, manufacture and market a broad portfolio of bearings, gearing and engineered
components.
 
Plain
Bearings. Plain bearings are primarily used to rectify inevitable misalignments in various mechanical components, such as aircraft
controls, helicopter rotors, or heavy mining and construction equipment. Such misalignments are either due to machining inaccuracies
or result when components change position relative to each other. Plain bearings are produced with either self-lubricating or metal-to-metal
designs and consist of several sub-classes, including rod end bearings, spherical plain bearings and journal bearings.
 
Roller
Bearings. Roller bearings are anti-friction products that utilize cylindrical rolling elements. We produce three main designs: tapered
roller bearings, needle roller bearings and needle bearing track rollers, and cam followers. We offer several needle roller bearing designs
that are used in both industrial applications and certain U.S. military aircraft platforms where there are high loads and the design
is constrained by space considerations. A significant portion of our sales of needle roller bearings is to the aftermarket rather than
to OEMs. Needle bearing track rollers and cam followers have wide and diversified use in the industrial market and are often prescribed
as a primary component in articulated aircraft wings.
 
Ball
Bearings. Ball bearings are devices that utilize high precision ball elements to reduce friction in high-speed applications. We specialize
in four main types of ball bearings: high precision aerospace, airframe control, thin section, and industrial ball bearings. High precision
aerospace bearings are primarily sold to customers in the defense industry that require more technically sophisticated bearing products
providing a high degree of fault tolerance given the criticality of the applications in which they are used. Airframe control ball bearings
are precision ball bearings that are plated to resist corrosion and are qualified under a military specification. Thin section ball bearings
are specialized bearings that use extremely thin cross sections and give specialized machinery manufacturers many advantages. We produce
a general line of industrial ball bearings sold primarily to the aftermarket.
 
Mounted
Bearings. Mounted bearings are fully assembled bearings with a wide range of shaft attachment methods, rolling elements, housing
materials and configurations offering a variety of sealing solutions. Mounted bearing products include mounted ball bearings, mounted
roller bearings and mounted plain bearings, and are used in light to heavy loads, and in clean, corrosive or harsh environments. Mounted
roller bearings are pre-machined to allow field installation of the Dodge bearing sensor, adding remote monitoring capability in difficult
to access applications and unsafe environments. Applications include unit and bulk material handling, industrial air handling, large
rotor fans, food processing, roll-out tables, and forest pulp and paper processing equipment.
 
Enclosed
Gearing. We provide a broad range of enclosed gearing product lines including Quantis Gearmotor (helical style gearing with modular
configurations and a variety of mounting methods), Torque Arm (shaft-mount gearing with helical style gearing and v-belt input for first
stage reduction), Tigear (single reduction, right angle gear reducers with worm style gearing), MagnaGear & Maxum (parallel reducers
with helical and planetary style gearing) and Controlled Start Transmission (planetary style gearing with hydraulic clutch package used
for soft starting large conveyors). Applications include unit and bulk handling, food processing, roll-out tables, and forest pulp and
paper processing equipment.
 
Motion Control Components.
Power transmission components are of three types: mechanical drive components (offering V belt sheaves, synchronous sprockets, bushings
and belts) used to change rotational speed between two pieces of equipment; couplings used to transmit torque between two rotating pieces
of equipment, such as a motor and a gearbox; and conveyor components, which transfer torque from the mechanical drive equipment to the
conveyor belt in bulk material handling applications. Applications include unit and bulk material handling, industrial air handling, large
rotor fans, food processing, roll-out tables, and forest pulp and paper processing equipment. We also provide actuation components to
customers within our commercial aerospace and space markets.
 
Engineered
Components. Engineered components include highly engineered hydraulics and valves, fasteners, precision mechanical components and
machine tool collets. Engineered hydraulics and valves are used in aircraft and submarine applications and aerospace and defense aftermarket
services. Precision mechanical components are used in all general industrial applications where some form of movement is required. Machine
tool collets are cone-shaped metal sleeves used for holding circular or rod-like pieces in a lathe or other machine that provide effective
part holding and accurate part location during machining operations.
 


3
 

 
Product
Design and Development
 
We
produce specialized bearings and engineered components that are often tailored to the specifications of a customer or application. Our
sales professionals are highly experienced engineers who collaborate with our customers to develop bearing and engineered component solutions.
The product development cycle can follow many paths, which are dependent on the end market or sales channel. The process normally takes
between three and six years from concept to sale depending upon the application and the market. A typical process for a major OEM project
begins when our design engineers meet with the customer at the machine design conceptualization stage and work with them through the
conclusion of the product development.
 
Often,
at the early stage, a bearing or engineered component design is produced that addresses the expected demands of the application including
load, stress, heat, thermal gradients, vibration, lubricant supply, pressure and flows, and corrosion resistance, with one or two of
these environmental constraints being predominant in the design consideration. A bearing or engineered component design must perform
reliably for the period of time required by the customer’s product objectives.
 
Once
a bearing or engineered component is designed, a mathematical simulation is created to replicate the expected application environment
and thereby allow optimization with respect to these design variables. Upon conclusion of the design and simulation phase, samples are
produced and laboratory testing commences at one of our test laboratories. The purpose of this testing phase is not only to verify the
design and the simulation model but also to allow further design improvement where needed. The last phase is field testing by the customer,
after which the product is ready for sale.
 
For
many of our Aerospace/Defense products, the culmination of this lengthy process is the receipt of a product approval or certification,
generally obtained from either the OEM, the DOD or the Federal Aviation Administration (“FAA”), which allows us to supply
the product to the OEM customer and to the aftermarket. We currently have a significant number of such approvals, which often gives us
a competitive advantage, and in many of these instances we are the only approved supplier of a given bearing or engineered component.

 
Manufacturing
and Operations 
 
Our
manufacturing strategies are focused on product reliability, quality, safety and service. Custom and standard products are produced according
to manufacturing schedules that ensure maximum availability of popular items for immediate sale while carefully considering the economies
of lot production and special products. Capital programs and manufacturing methods development are focused on quality improvement, production
costs, safety and service. A monthly review of product line production performance assures an environment of continuous attainment of
profitability and quality goals.
 
Capacity.
Our plants currently run on a full first shift with second and third shifts at select locations to meet the demands of our customers.
We believe that current capacity levels and future annual estimated capital expenditures on equipment up to approximately 3.0% to 3.5%
of net sales should permit us to effectively meet demand levels for the foreseeable future.
 
Inventory
Management. We operate an inventory management program designed to balance customer delivery requirements with economically optimal
inventory levels. In this program, each product is categorized based on characteristics including order frequency, number of customers
and sales volume. Using this classification system, our primary goal is to maintain a sufficient supply of standard items while minimizing
costs. In addition, production cost savings are achieved by optimizing plant scheduling around inventory levels and customer delivery
requirements. This leads to more efficient utilization of manufacturing facilities and minimizes plant production changes while maintaining
sufficient inventories to service customer needs.
 
Sales,
Marketing and Distribution
 
Our
marketing strategy is aimed at increasing sales within our two primary markets, targeting specific applications in which we can exploit
our competitive strengths. To affect this strategy, we seek to expand into geographic areas not previously served by us and we continue
to capitalize on new markets and industries for existing and new products. We employ a technically proficient sales force and utilize
marketing managers, product managers, customer service representatives and product application engineers in our selling efforts.
 
We have developed our sales
force through the hiring of sales personnel with prior industry experience, complemented by an in-house training program. We intend to
continue to hire and develop expert sales professionals and strategically locate them to implement our expansion strategy. Today, our
direct sales force is located to service North America, Europe, Asia, Australia and Latin America and is responsible for selling all of
our products. This selling model leverages our relationship with key customers and provides opportunities to market multiple product lines
to both established and potential customers. We also sell our products through a well-established, global network of industrial and aerospace
distributors. This channel primarily provides our products to smaller OEM customers, aftermarket customers and the end users of bearings
and engineered components that require local inventory and service. We intend to continue to focus on building distributor sales volume.
 


4
 

 
The Company has a joint venture
in North America focused on joint warehouse and transportation logistics and e-business services. This joint venture, CoLinx, LLC (“CoLinx”),
includes five equity members: Timken, SKF Group, Schaeffler Group, RBC Bearings Incorporated and Gates Industrial Corp. The e-business
service focuses on information and business services for authorized distributors in the Industrial segment.
 
The
sale of our products is supported by a well-trained and experienced customer service organization, which provides customers with instant
access to key information regarding their purchases. We also provide customers with updated information through our website, and we have
developed on-line integration with specific customers, enabling more efficient ordering and timely order fulfillment for those customers.
 
We store product inventory
in warehouses located in the Midwest, Southwest and on the East and West coasts of the U.S. as well as in Australia, Canada, France, India,
Mexico, the People’s Republic of China, England and Switzerland. The inventory is located in these locations based on analysis
of customer demand to provide superior service and product availability.
 
Competition
 
Our principal competitors
include SKF, New Hampshire Ball Bearings, Regal Rexnord, NORD and Timken, although we compete with different companies for each of our
product lines. We believe that for the majority of our products, the principal competitive factors affecting our business are product
qualifications, product line breadth, service, quality and price. Although some of our current and potential competitors may have greater
financial, marketing, personnel and other resources than us, we believe that we are well-positioned to compete with regard to each of
these factors in each of the markets in which we operate.
 
Product Qualifications.
Many of the products we produce are qualified for the application by the OEM, the DOD, the FAA, the user or a combination of these. These
credentials have been achieved for thousands of distinct items after years of design, testing and improvement. Applicable Dodge products
are compliant as required with related communications, safety, and Ex certifications for use in North America, Mexico, the EU, as well
as other select international locations. Several of our products are protected by patents, and we believe that in many cases we have strong
brand identity or we are the sole source for products for a particular application.
 
Product
Line Breadth. Our products encompass a broad range of designs which often create a critical mass of complementary bearings, essential
systems and engineered components for our markets. This position provides many of our industrial and aerospace customers with a single
manufacturer to provide the engineering service and product breadth needed to achieve a series of OEM design objectives and/or aftermarket
requirements. This enhances our value to the OEM considerably while strengthening our overall market position.
 
Service.
Product design, performance, reliability, availability, quality, and technical and administrative support are elements that define
the service standard for this business. Our customers are sophisticated and demanding, as our products are fundamental and enabling components
to the manufacturing or operation of their machinery. We maintain inventory levels of our most popular items for immediate sale and service.
Our customers have high expectations regarding product availability and quality, and the primary emphasis of our service efforts is to
provide the widest possible range of available products delivered on a timely basis.
 
Price.
We believe our products are priced competitively in the markets we serve and we continually evaluate our manufacturing and other
operations to maximize efficiencies in order to maintain competitive prices while maximizing our profit margins. We invest considerable
effort to develop our price-to-value algorithms and we price to market levels where required by competitive pressures.
 
Joint
Ventures
 
Investments
in affiliated companies accounted for under the equity method at March 30, 2024 and April 1, 2023 were $0.6 and $0.6, respectively, and
were reported within other noncurrent assets on the consolidated balance sheets.
 


5
 

 
Suppliers
and Raw Materials
 
We
obtain raw materials, component parts and supplies from a variety of sources and generally from more than one supplier. Our principal
raw materials are steel and cast iron. Our suppliers and sources of raw materials are based in the U.S., Europe and Asia. We purchase
steel at market prices, which fluctuate as a result of supply and demand driven by economic conditions in the marketplace. For further
discussion of the possible effects of changes in the cost of raw materials on our business, see Part I, Item 1A. “Risk Factors”
of this Annual Report on Form 10-K.
 
Backlog
 
Our order backlog, as of March
30, 2024, was $726.1 compared to $663.8 as of April 1, 2023. These figures exclude orders from our Sargent marine and Sargent aerospace
businesses that are expected to be fulfilled more than 12 months after the balance sheet dates. Including all orders from our Sargent
marine and Sargent aerospace businesses, our backlog as of March 30, 2024 was $821.5 compared to $759.4 as of April 1, 2023. Many of our
orders are fulfilled immediately after the order has been placed by the customer and would not be seen in our backlog at the end of a
reporting period. Orders included in our backlog are subject to cancellation, delay or modifications by our customers prior to fulfillment.
We sell many of our products pursuant to contractual agreements, single-source relationships or long-term purchase orders, each of which
may permit early termination by the customer. However, we believe that the unique nature of many of our products prevents other suppliers
from being able to satisfy customer orders on a timely or cost-effective basis, thereby making it impracticable for our customers to shift
their purchase of these products to other suppliers.
 
Human
Capital
 
RBC employs 5,302 people worldwide.
Of that, 3,738 are employed at our 35 U.S. facilities and 1,564 are employed at our 19 international facilities located in Canada, Mexico,
France, Switzerland, Germany, Poland, India, Australia, China and England. The majority of our personnel are RBC employees rather than
independent contractors, temporaries or third-party labor provider personnel.
 
Our
human capital objective is to attract and retain high-performing people who can work in a culture that fosters innovation and continuous
improvement. To achieve that objective, we maintain an aggressive talent recruitment program, a fair and competitive compensation program,
an on-going training and development program, and an ethical and safe work environment.
 
Talent
Recruitment. Critical to our success is that we have a deep and talented pool of engineers who oversee the production of our current
products to the highest standards, work directly with customers on applications, and direct the research and development for new products.
To maintain that talent pool, we actively recruit engineers from over 40 colleges and universities around the U.S. In addition, we have
developed deep collaborative relationships with a select group of schools, including internship and trainee programs with several of
these schools.
 
Compensation.
We offer fair and competitive compensation to our employees. Our employee benefits package includes medical, dental and vision coverage,
life insurance, supplemental disability coverage, and 401(k) and supplemental employee retirement plans. In addition, participation in
our long-term equity incentive plan goes very deep in our organization, providing employees with equity compensation/awards that they
might not receive if they worked for one of our competitors.
 
Training. An important
part of achieving our human capital objective is our in-house training programs – RBC University, Materials University, Mechanical
Engineering Training and the Customer, Application, Product Training (CAPT) Program. These programs provide our employees with a uniform
foundation regarding how we do business, expand their subject matter expertise, and develop the various leadership positions across our
organization, including plant management and general management. We also offer a tuition reimbursement program for many employees wishing
to further their classroom education in their chosen field.
 
Ethics.
We expect our personnel to conduct the business of RBC in a legal and ethical manner. To ensure that they do that, our people are
required to comply at all times with our corporate Code of Conduct, which among other things requires them to:
 

●deal
                                            fairly with their coworkers and RBC’s customers, suppliers and competitors,

 

●comply
                                            with all applicable laws,

 

●protect
                                            RBC’s proprietary information and other assets, and

 

●avoid
                                            conflicts of interest with RBC.

 
Workplace
Safety. Safety is of paramount importance to RBC and so we go to great lengths in striving for a zero-incident workplace that is
consistent with our mandate to produce the highest quality, highly engineered components for our customers. Our general managers and
operations managers are charged with creating and maintaining the highest standards of safety for employees, visitors and the local community
through the use of industry best practices at their facilities. Monthly, each of our facilities reports to senior leadership on key safety
metrics and we maintain a proactive approach in assessing and mitigating risk through root cause analysis, communication, training and
teamwork.
 


6
 

 
Intellectual
Property 
 
We
own U.S. and foreign patents and trademark registrations and U.S. copyright registrations and have U.S. trademark and patent applications
pending. We file patent applications and maintain patents to protect certain technology, inventions and improvements that are important
to the development of our business, and we file trademark applications and maintain trademark registrations to protect product names
that have achieved brand-name recognition among our customers. We also rely upon trade secrets, know-how and continuing technological
innovation to develop and maintain our competitive position. Many of our brands are well recognized by our customers and are considered
valuable assets of our business. We do not believe, however, that any individual item of intellectual property is material to our business.
 
Regulation
 
Product
Approvals. Essential to servicing the aerospace and defense markets is the ability to obtain product approvals. We have a substantial
number of product approvals in the form of OEM approvals or Parts Manufacturer Approvals, or “PMAs,” from the FAA. We also
have a number of active PMA applications in process. These approvals enable us to provide products used in virtually all domestic aircraft
platforms presently in production or operation.
 
We
are subject to various other federal laws, regulations and standards. New laws, regulations or standards or changes to existing laws,
regulations or standards could subject us to significant additional costs of compliance or liabilities, and could result in material
reductions to our results of operations, cash flow or revenues.
 
Environmental
Matters
 
We
are subject to federal, state and local environmental laws and regulations, including those governing discharges of pollutants into the
air and water, the storage, handling and disposal of wastes and the health and safety of employees. We also may be liable under the Comprehensive
Environmental Response, Compensation, and Liability Act or similar state laws for the costs of investigation and clean-up of contamination
at facilities currently or formerly owned or operated by us, or at other facilities at which we have disposed of hazardous substances.
In connection with such contamination, we may also be liable for natural resource damages, U.S. government penalties and claims by third
parties for personal injury and property damage. Agencies responsible for enforcing these laws have authority to impose significant civil
or criminal penalties for non-compliance. We believe we are currently in material compliance with all applicable requirements of environmental
laws. We do not anticipate material capital expenditures for environmental compliance in fiscal year 2025.
 
Available
Information
 
We
file our annual, quarterly and current reports, proxy statements, and other documents with the Securities Exchange Commission (“SEC”)
under the Securities Exchange Act of 1934. The public may read and copy any materials filed with the SEC at the SEC’s Office of
Investor Education and Advocacy at 100F Street, NE, Washington, D.C. 20549. The public may obtain information on the operation of the
Office of Investor Education and Advocacy by calling the SEC at 1–800–SEC–0330. Also, the SEC maintains an Internet
website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with
the SEC. The public can obtain any documents that are filed by us at http://www.sec.gov.
 
In
addition, this Annual Report on Form 10-K, as well as our quarterly reports on Form 10-Q, current reports on Form 8-K, any amendments
to any of the foregoing reports, and our governance documents, are made available free of charge on our website (http://www.rbcbearings.com)
as soon as reasonably practicable after such reports are electronically filed with or furnished to the SEC. Copies of the above reports
and documents will also be provided free of charge upon written request to us.
 


7
 

 
ITEM
1A. RISK FACTORS 
 
Cautionary
Statement as to Forward-Looking Information
 
This
report includes “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities
Litigation Reform Act of 1995. All statements other than statements of historical fact are “forward-looking statements” for
purposes of federal and state securities laws, including: projections of earnings, cash flows, revenue or other financial items; statements
of the plans, strategies and objectives of management for future operations; statements concerning proposed new services or developments;
statements regarding future economic conditions or performance or future growth rates in the markets we serve; statements regarding future
raw material costs or supply; statements of belief; and statements of assumptions underlying any of the foregoing. Forward-looking statements
may include the words “may,” “could,” “estimate,” “intend,” “plan,” “continue,”
“believe,” “expect,” “anticipate” or other comparable terminology, or the negative of such terms.
 
Although
we believe that the expectations and assumptions reflected in any of our forward-looking statements are reasonable, actual results could
differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition, results of
operations, and cash flows, as well as any forward-looking statements, are subject to change and to inherent risks and uncertainties,
such as those disclosed in this Annual Report on Form 10-K. Factors that could cause our actual results, performance and achievements
or industry results to differ materially from estimates or projections contained in forward-looking statements include, among others,
the following:
 

●The
                                            Company’s failure to maintain effective disclosure controls and procedures and internal
                                            control over financial reporting;

 

●Competition in the bearings, engineered components and essential systems industries;
 

●Weaknesses
                                            or cyclicality in any of the industries in which our customers operate;

 

●Future
                                            reductions in U.S. governmental spending or changes in governmental programs, particularly
                                            military equipment procurement programs;

 

●The loss of one or more of our significant customers
or conditions that adversely affect the business of any of our significant customers;

 

●Our
                                            ability to obtain and retain product approvals;

 

●Supply
                                            and costs of raw materials (particularly steel) and energy resources, the imposition of import
                                            tariffs, and our ability to pass through these costs on a timely basis;

 

●Our
                                            ability to acquire and integrate complementary businesses;

 

●Unanticipated
                                            liabilities of acquired businesses;

 

●Unexpected
                                            equipment failures or catastrophic events;

 

●Our
                                            ability to attract and retain our management team and other highly skilled personnel;

 

●Work
                                            stoppages and other labor problems affecting us or our customers or suppliers;

 

●Changes
                                            in trade agreements or treaties and the imposition of tariffs on our goods exported to other
                                            countries;

 

●Regulatory
                                            changes or developments in the U.S. or in foreign countries where we produce or sell products;

 

●Developments
                                            or disputes concerning patents or other proprietary rights;

 

●Risks
                                            associated with utilizing information technology systems, including cyber events;

 

●Risks
                                            associated with operating internationally, including currency translation risks;

 

●Investors’
                                            perceptions of us and our industry;

 

●The
                                            cancellation of orders in our backlog;

 

●Possible
                                            liability and recalls with respect to our products;

 

●Risks
                                            associated with the substantial amount of goodwill that we have;

 

8
 

 

●Risks
                                            associated with the substantial amount of debt we incurred to finance the Dodge acquisition;
                                            and

 

●Other
                                            risks and uncertainties including but not limited to those described from time to time in
                                            our current and quarterly reports filed with the SEC.

 
These
and additional factors that could cause actual results to differ materially from our forward-looking statements are set forth in this
Annual Report on Form 10-K under Part I, Item 1. “Business,” Part I, Item 1A. “Risk Factors,” Part II, Item 7.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and Part II, Item 8. “Financial
Statements and Supplementary Data.” All forward-looking statements contained in this report and any subsequently filed reports
are expressly qualified in their entirety by these cautionary statements.
 
We
have no duty to update any forward-looking statements after the date of this report to conform such statements to actual results or to
changes in our expectations. You are advised, however, to review any disclosures we make on related subjects in our future periodic filings
with the SEC.
 
Risk
Factors Relating to Our Company
 
Our
business, operating results, cash flows or financial condition could be materially adversely affected by any of the following risks.
The trading price of our common stock or preferred stock could decline due to any of these risks, and you could lose all or part of your
investment. You should carefully consider these risks before investing in shares of our common stock or preferred stock.
 
The
Company’s failure to maintain effective disclosure controls and procedures and internal control over financial reporting could
result in material misstatements in our financial statements and a failure to meet our reporting and financial obligations, each of which
could have a material adverse effect on the Company’s financial condition and the trading price of our common stock.
 
A
material weakness in a company’s internal control over financial reporting is a deficiency, or a combination of deficiencies, in
internal control over financial reporting such that there is a reasonable possibility that a material misstatement of that company’s
annual or interim financial statements will not be prevented or detected on a timely basis.
 
During
the first quarter of fiscal year 2023, the Company’s management identified a material weakness in internal control over financial
reporting related to the design of our control to consider all relevant terms within executive employment agreements and the related
application of relevant authoritative accounting guidance for stock-based compensation, a non-cash item. Management then re-evaluated
its assessment of the effectiveness of internal control over financial reporting and its disclosure controls and procedures and concluded
that they were not effective as of April 2, 2022, making it necessary for the Company to restate the financial statements for fiscal
years 2022, 2021 and 2020. Although we have remediated this material weakness, there can be no assurance that additional material weaknesses
will not occur in the future.
 
If
the Company is unable to maintain effective internal control over financial reporting in the future, our ability to record, process and
report financial information timely and accurately could be adversely affected, which could subject the Company to litigation or investigations,
require management resources, increase costs, negatively affect investor confidence and adversely impact our stock price.
 
The
bearings, engineered components and essential systems industries are highly competitive, and competition could reduce our profitability
or limit our ability to grow.
 
The
global bearings, engineered components and essential systems industries are highly competitive, and we compete with many U.S. and non-U.S.
companies, some of which benefit from lower labor costs and fewer regulatory burdens than us. We compete primarily based on product qualifications,
product line breadth, service and price. Certain competitors may be better able to manage costs than us or may have greater financial
resources than we have. Due to the competitiveness in the bearings, engineered components and essential systems industries we may not
be able to increase prices for our products to cover increases in our costs, and we may face pressure to reduce prices, which could materially
reduce our revenues, cash flows and profitability. Competitive factors, including changes in market penetration, increased price competition
and the introduction of new products and technology by existing and new competitors, could result in a material reduction in our revenues,
cash flows and profitability.
 
The
loss of a major customer, or a material adverse change in a major customer’s business, could result in a material reduction in
our revenues, cash flows and profitability.
 
Our top ten customers collectively
accounted for approximately 44%, 41% and 36% of our net sales during fiscal 2024, 2023 and 2022, respectively. Accordingly, the loss of
one or more of those customers or a substantial decrease in those customers’ purchases from us could result in a material reduction in
our revenues, cash flows and profitability. If one of our major customers were to experience an adverse change in its business, that customer
could reduce its purchases from us.
 
The
consolidation and combination of manufacturers could eliminate customers and/or put downward pricing pressures on sales of component
parts. For example, the consolidation that has occurred in the defense industry in recent years has reduced the overall number of defense
contractors. In addition, if one of our customers is acquired or merged with another entity, the new entity may discontinue using us
as a supplier because of an existing business relationship between one of our competitors and the acquiring company, or because it may
be more efficient to consolidate certain suppliers within the newly formed enterprise. The significance of the impact that such consolidations
could have on our business is difficult to predict because we do not know when or if one or more of our customers will engage in merger
or acquisition activity. However, if such activity involved our material customers it could materially impact our revenues, cash flows
and profitability.
 


9
 

 
Weakness
in any of the industries in which our customers operate, as well as the cyclical nature of our customers’ businesses generally, could
materially reduce our revenues, cash flows and profitability.
 
The mining and construction
equipment and other diversified industrial industries to which we sell our products are, to varying degrees, cyclical and tend to decline
in response to overall declines in industrial production. Margins in those industries are highly sensitive to demand cycles, and our customers
(or our customers’ customers) in those industries historically have tended to delay large capital purchases and projects, including
expensive maintenance and upgrades, during economic downturns. As a result, our business is also cyclical, and the demand for our products
by these customers depends, in part, on overall levels of industrial production, general economic conditions, and business confidence
levels. Many of our customers have historically experienced periodic downturns, which often have had a negative effect on demand for our
products. Future downward economic cycles or customer downturns could reduce sales of our products resulting in reductions in our revenues,
cash flows and profitability.
 
Future
reductions or changes in U.S. government spending could negatively affect our business.
 
In fiscal 2024, approximately
2% of our net sales were made directly, and we estimate that approximately an additional 9% of our net sales were made indirectly, to
the U.S. government to support military or other government projects. Our failure (or the failure of our customers that are prime contractors
to the government) to obtain new government contracts, the cancellation of government contracts relating to our products, or reductions
in federal budget appropriations for programs in which our products are used could materially reduce our revenues, cash flows and profitability.
A reduction in federal budget appropriations relating to our products could result from a shift in government defense spending to other
programs in which we are not involved or a reduction in U.S. government defense spending generally (due to budget reduction initiatives
or a shift in government spending priorities).
 
Fluctuating
supply and costs of subcomponents, raw materials and energy resources, or the imposition of import tariffs, could materially reduce our
revenues, cash flows and profitability.
 
Our
business is dependent on the availability and costs of subcomponents, raw materials, particularly steel (generally in the form of stainless
and chrome steel, which are commodity steel products), and energy resources. The availability and prices of subcomponents, raw materials
and energy resources may be subject to change due to, among other things, new laws or regulations, economic inflation, suppliers’
allocations to other purchasers, interruptions in production or deliveries by suppliers and changes in exchange rates and supplier costs
and profit expectations. The United States has imposed tariffs on steel and aluminum imports, and could impose tariffs on other items
that we import, which could increase the cost of raw materials and decrease the available supply. Although we currently maintain alternative
supply sources, our business is subject to the risk of price fluctuations and periodic delays in the delivery of certain subcomponents
or raw materials. Disruptions in the supply of subcomponents, raw materials or energy resources could temporarily impair our ability
to manufacture our products for our customers or require us to pay higher prices in order to obtain these items from other sources, which
could thereby affect our net sales and profitability.
 
Where
our customer contracts permit us to do so, we seek to pass through a significant portion of our additional costs to our customers through
steel surcharges or price increases. However, many of our contracts are fixed-price contracts under which we are not able to pass these
additional costs on to our customers. Even where we are able to pass these steel surcharges or price increases to our customers, there
may be a lag of several months between the time we experience a cost increase and the time we are able to implement surcharges or price
increases, particularly for orders already in our backlog. Competitive pressures and the terms of certain of our long-term contracts
may require us to absorb at least part of these cost increases. As a result, our gross margin percentage could decline. We cannot provide
assurances that we will be able to continue to pass these additional costs on to our customers at all or on a timely basis or that our
customers will not seek alternative sources of supply if there are significant or prolonged increases in the price of subcomponents or
other raw materials or energy resources.
 
Our
results could be impacted by governmental trade policies and tariffs relating to our supplies imported from foreign vendors or our finished
goods exported to other countries.
 
From
time to time, the U.S. government has imposed tariffs on the importation of various products that we use to produce our finished goods,
and various foreign countries, including the People’s Republic of China, have or could impose retaliatory tariffs on our products
exported to those countries. While this situation has not had a material adverse effect on our business in the past, future tariffs on
our foreign-sourced supplies and/or our finished goods exported to other countries could adversely impact our operating costs or demand
for our products.
 


10
 

 
Some
of our products and operations are subject to certain approvals and government regulations and the loss of such approvals, or our failure
to comply with such regulations, could materially reduce our revenues, cash flows and profitability.
 
Essential
to servicing the aerospace market is the ability to obtain product approvals. We have a substantial number of product approvals, which
enable us to provide products used in virtually all domestic aircraft platforms presently in production or operation. Product approvals
are typically issued by the FAA to designated OEMs who are Production Approval Holders of FAA-approved aircraft. These Production Approval
Holders provide quality control oversight and generally limit the number of suppliers directly servicing the commercial aerospace market.
Regulations enacted by the FAA provide for an independent process (the PMA process) that enables suppliers who currently sell their products
to the Production Approval Holders to also sell products to the aftermarket. Our foreign sales may be subject to similar approvals or
U.S. export control restrictions. We cannot assure you that we will not lose approvals for our aerospace products in the future. The
loss or suspension of product approvals could result in lost sales and materially reduce our revenues, cash flows and profitability.
 
The
repair and overhaul of aircraft parts and accessories throughout the world is highly regulated by government agencies, including the
FAA. Our repair and overhaul operations are subject to certification pursuant to regulations established by the FAA and foreign government
agencies, with regulations varying from country to country, although compliance with FAA requirements generally satisfies regulatory
requirements in other countries. Our failure to comply with these regulations, or our compliance with new and more stringent government
regulations, if enacted, could have an adverse effect on our business, financial condition and results of operations.
 
As
a U.S. government contractor, we are subject to various procurement and other laws, regulations and contract terms applicable to our
industry, including the FAR, the DFARS, the Truth in Negotiations Act, the False Claims Act, the Procurement Integrity Act, the International
Traffic in Arms Regulations promulgated under the Arms Export Control Act, the Close the Contractor Fraud Loophole Act, the Foreign Corrupt
Practices Act, and CAS, and we could be adversely affected by any negative finding by the U.S. government as to our compliance with them,
including suspension or debarment from future government contracting.
 
The
retirement of commercial aircraft could reduce our revenues, cash flows and profitability. 
 
We
sell replacement parts used in the repair and overhaul of jet engine and aircraft components, as well as provide such repair and overhaul
services ourselves. As aircraft or engines for which we offer replacement parts or repair and overhaul services are retired, demand for
these parts and services could decline and could reduce our revenue, cash flows and profitability.
 
Risks
associated with utilizing information technology systems could adversely affect our operations. 
 
We
rely upon our information technology (“IT”) systems to process, transmit and store electronic information to manage and operate
our business. Further, in the ordinary course of business we store sensitive data, including intellectual property, on our networks.
The secure maintenance and transmission of this information is critical to our business operations.
 
We may face cyber events and
other IT security threats, including malware, ransomware, phishing and other intrusions, to our IT infrastructure, attempts to gain unauthorized
access to proprietary, classified or confidential information, and threats to the physical security of our IT systems. As a U.S. government
contractor, our risk of cyber events may be greater than the risk faced by other companies that are not government contractors. In addition
to security threats, our IT systems may also be subject to network, software or hardware failures. The unavailability of our IT systems,
the failure of these systems to perform as anticipated, or any significant breach of data security could cause loss of data, disrupt our
operations, require significant management attention and resources, subject us to liability to third parties or regulatory actions or
contract termination, and negatively impact our reputation among our customers and the public, which could have a negative impact on our
financial and competitive position, results of operations and liquidity. In addition, our business with our customers and vendors could
be impacted by cyber events on their IT systems.
 
To address the risk to our
IT systems and data, we maintain an IT security program designed to resist cyber events and to mitigate the damage from successful events.
Refer to Part I, Item 1C of this Annual Report for details regarding our data protection and cybersecurity risk management program.
 


11
 

 
Work
stoppages and other labor problems could materially reduce our ability to operate our business.
 
We
currently have three collective bargaining agreements covering employees at our Plymouth, Indiana, Fairfield, Connecticut and West Trenton,
New Jersey facilities, representing approximately 7% of our U.S.-based hourly employees as of March 30, 2024. While we believe our relations
with our employees are satisfactory, the inability to satisfactorily negotiate and enter into new collective bargaining agreements upon
expiration, or a lengthy strike or other work stoppage at any of our facilities, particularly at some of our larger facilities, could
materially reduce our ability to operate our business. In addition, any attempt by our employees not currently represented by a union
to join a union could result in additional expenses, including with respect to wages, benefits and pension obligations.
 
In
addition, work stoppages at one or more of our customers or suppliers (including suppliers of transportation services), many of which
have large unionized workforces, could also cause disruptions to our business that we cannot control, and these disruptions could materially
reduce our revenues, cash flows and profitability.
 
Unexpected
equipment failures or catastrophic events could increase our costs and reduce our sales due to production curtailments or shutdowns.
 
Our
manufacturing processes are dependent upon critical pieces of turning, milling, grinding, and electrical equipment, and this equipment
could, on occasion, be out of service as a result of unanticipated failures. In addition to equipment failures, our facilities are also
subject to the risk of catastrophic loss due to unanticipated events such as fires, explosions, earthquakes or violent weather conditions.
In the future, we could experience material plant shutdowns or periods of reduced production as a result of these types of equipment
failures or catastrophes. Interruptions in production capabilities would inevitably increase our production costs and reduce revenues,
cash flows and profitability for the affected period.
 
We
may not be able to continue to make the acquisitions necessary for us to realize our growth strategy.
 
The
acquisition of businesses that complement or expand our operations is an important element of our business strategy. We frequently engage
in evaluations of potential acquisitions and negotiations for possible acquisitions, some of which, if consummated, could be significant
to us. We cannot assure you that we will be successful in identifying attractive acquisition candidates or completing acquisitions on
favorable terms in the future. Our inability to acquire businesses, or to operate them profitably once acquired, could have a material
adverse effect on our business, financial position, cash flow and growth.
 
Our
ability to realize anticipated benefits and synergies from our acquisitions could be affected by a number of factors, including: the
need for greater than expected cash or other financial resources or management time in order to implement or integrate acquisitions;
increases in other expenses related to an acquisition, including restructuring and other exit costs; the timing and impact of purchase
accounting adjustments; difficulties in employee or management integration, including labor disruptions or disputes; and unanticipated
liabilities associated with acquired businesses.
 
Any
potential cost-saving opportunities may take several quarters following an acquisition to implement, and any results of these actions
may not be realized for several quarters thereafter, if at all.
 
Businesses
that we acquire may have liabilities for which we are liable.
 
In order to complete an acquisition,
it may be necessary for us to assume the liabilities of the acquired business. These liabilities may be known at the time of the acquisition,
but could be underestimated by us, or they may not be known to us until after the acquisition. In the case of an acquisition in which
we do not assume all the liabilities of the acquired business, we typically obtain indemnification from the seller against the unassumed
liabilities, although no assurance can be given that such indemnification will be sufficient in amount, scope or duration to fully offset
the risk of the unassumed liabilities. Liabilities of acquired businesses that ultimately are borne by us (either because we assume them
or our indemnification right proves to be insufficient or unenforceable) could have a material adverse effect on our business, financial
condition or results of operations. In addition, after we complete an acquisition we may learn of other matters that adversely affect
us, such as issues relating to the acquired business’s compliance with applicable laws, or issues relating to its supply chain,
customer relationships or order demand.
 


12
 

 
Goodwill
and indefinite-lived intangibles comprise a significant portion of our total assets, and if we determine that goodwill and indefinite-lived
intangibles have become impaired in the future, our results of operations and financial condition in such years may be materially and
adversely affected.
 
Goodwill
represents the excess of cost over the fair market value of net assets acquired in business combinations. Indefinite-lived intangibles
represent repair station certifications obtained in business combinations and assumed to have indefinite lives. As of March 30, 2024,
we had $1,874.9 of goodwill and $24.3 of indefinite-lived intangibles, representing approximately 41% of our total assets. We review
goodwill and indefinite-lived intangibles at least annually for impairment and any excess in carrying value over the estimated fair value
is charged to the results of operations. Our estimates of fair value are based on assumptions about the future operating cash flows,
growth rates, discount rates applied to these cash flows, and current market estimates of value. If we are required to record a charge
to earnings because of an impairment of goodwill or indefinite-lived intangibles, our results of operations and financial condition could
be materially and adversely affected.
 
We
depend heavily on our senior management and other key personnel, the loss of whom could materially affect our financial performance and
prospects.
 
Our
business is managed by a number of key personnel, including our CEO Dr. Michael J. Hartnett. Our future success will depend on,
among other things, our ability to retain the services of these personnel and to hire their successors and other highly qualified employees
at all levels.
 
Our
international operations are subject to risks inherent in such activities.
 
We have operations in Australia,
England, Canada, France, Germany, India, Mexico, the Peoples Republic of China, Poland and Switzerland. Of our 54 facilities in 11 countries,
19 are located outside the U.S., including 10 manufacturing facilities in four countries.
 
In fiscal 2024, approximately
12% of our net sales were generated by our international operations. We expect that this proportion is likely to increase as we seek to
increase our penetration of foreign markets, including through acquisitions. Our foreign operations are subject to the risks inherent
in such activities such as: currency devaluations, logistical and communication challenges, costs of complying with a variety of foreign
laws and regulations, greater difficulties in protecting and maintaining our rights to intellectual property, difficulty in staffing and
managing geographically diverse operations, acts of terrorism or war or other acts that may cause social disruption which are difficult
to quantify or predict, and general economic conditions in these foreign markets. Our international operations may be negatively impacted
by changes in government policies, such as changes in laws and regulations, restrictions on imports and exports, sources of supply, duties
or tariffs, the introduction of measures to control inflation, and changes in the rate or method of taxation. To date we have not experienced
significant difficulties with the foregoing risks associated with our international operations.
 
Currency
translation risks may have a material impact on our results of operations.
 
The
majority of our foreign operations utilize the local currency as their functional currency. Foreign currency transaction gains and losses
are included in earnings. Foreign currency transaction exposure arises primarily from the transfer of foreign currency from one subsidiary
to another within the group and to foreign currency-denominated trade receivables. Unrealized currency translation gains and losses are
recorded on the balance sheet upon translation of the foreign operations’ functional currency to the reporting currency. Because
our financial statements are denominated in U.S. dollars, changes in currency exchange rates between the U.S. dollar and the currencies
used by our international operations have had, and will continue to have, an impact on our earnings. We periodically enter into derivative
financial instruments such as forward exchange contracts to reduce the effect of fluctuations in exchange rates on certain third-party
sales transactions denominated in non-functional currencies. Currency fluctuations may affect our financial performance in the future
and we cannot predict the impact of future exchange rate fluctuations on our results of operations. See Part II, Item 7A. “Quantitative
and Qualitative Disclosures about Market Risk—Foreign Currency Exchange Rates” of this Annual Report on Form 10-K.
 
We
may incur material losses for product liability and recall-related claims.
 
We are subject to a risk of
product and recall-related liability in the event that the failure, use or misuse of any of our products results in personal injury, death
or property damage or our products do not conform to our customers’ specifications. In particular, our products are installed in a number
of types of vehicle fleets, including airplanes, helicopters, trains, automobiles, heavy trucks and farm equipment, many of which may
be subject to government-ordered recalls as well as voluntary recalls by the manufacturer. If one of our products is found to be defective,
causes a fleet to be disabled or otherwise results in a product recall, significant claims may be brought against us. We currently maintain
insurance coverage for product liability claims but not for recall-related claims. We cannot assure you that product liability claims,
if made, would not exceed our insurance coverage limits. Claims that are not covered by insurance, or that exceed insurance coverage limits,
could result in material losses. Claims that are covered by insurance could result in increased future insurance costs.
 


13
 

 
Our
intellectual property and proprietary information are valuable, and any inability to protect them could adversely affect our business
and results of operations; in addition, we may be subject to infringement claims by third parties.
 
Our
ability to compete effectively is dependent upon our ability to protect and preserve the intellectual property and proprietary information
owned, licensed or otherwise used by us. We have numerous U.S. and foreign trademark registrations and patents. We also have U.S. and
foreign trademark and patent applications pending. We cannot assure you that our pending trademark and patent applications will result
in trademark registrations and issued patents, and our failure to secure rights under these applications may limit our ability to protect
the intellectual property rights that these applications were intended to cover. Although we have attempted to protect our intellectual
property and proprietary information both in the United States and in foreign countries through a combination of patent, trademark, copyright
and trade secret protection, and non-disclosure agreements, these steps may be insufficient to prevent unauthorized use of our intellectual
property and proprietary information, particularly in foreign countries where the protection available for such intellectual property
and proprietary information may be limited. We cannot assure you that any of our intellectual property rights will not be infringed upon
or that our trade secrets will not be misappropriated or otherwise become known to or independently developed by competitors. We may
not have adequate remedies available for any such infringement or other unauthorized use. We cannot assure you that any infringement
claims asserted by us will not result in our intellectual property being challenged or invalidated, that our intellectual property will
be held to be of adequate scope to protect our business, or that we will be able to deter current and former employees, contractors or
other parties from breaching confidentiality obligations and misappropriating trade secrets.
 
We
could become subject to litigation claiming that our intellectual property or proprietary information infringes the rights of a third
party. In that event, we could incur substantial defense costs and, if such litigation is successful, we could be required to pay the
claimant damages for our past use of such intellectual property or proprietary information, and we could either be required to pay royalties
for our use of it in the future or be prohibited from using it in the future. Our inability to use our intellectual property and proprietary
information on a cost-effective basis in the future could have a material adverse effect on our revenue, cash flow and profitability.
See Part I, Item 1. “Business—Intellectual Property” of this Annual Report on Form 10-K.
 
Cancellation
of orders in our backlog could negatively impact our revenues, cash flows and profitability.
 
As
of March 30, 2024, we had an order backlog of $821.5, including all orders from our Sargent marine and Sargent aerospace businesses.
However, orders included in our backlog may be subject to cancellation, delay or other modifications by our customers and we cannot assure
you that these orders will ultimately be fulfilled.
 
Quarterly
performance can be affected by the timing of government product inspections and approvals. 
 
A
portion of our revenue is associated with contracts with the U.S. government that require onsite inspection and approval of the products
by government personnel before we may ship the products, and we have no control over the timing of those inspections and approvals. If
products scheduled for delivery in one quarter are not inspected or approved until the following quarter, the delay would adversely affect
our sales and profitability for the quarter in which the shipments were scheduled.
 
We
incurred substantial debt in order to complete the Dodge acquisition, which could constrain our business and exposes us to the risk of
defaults under our debt instruments. 
 
In fiscal 2022, we incurred
$1,800.0 of total debt to finance the Dodge acquisition. As of March 30, 2024, our total debt was $1,191.9. This debt could or will have
important consequences, including, but not limited to:
 

●this
                                            debt requires us to make significant interest and principal payments in the future;

 

●a
                                            substantial portion of our cash flow from operations will be used to repay the principal
                                            and interest on our debt, thereby reducing the funds available to us for other purposes including
                                            for strategic acquisitions, working capital, capital expenditures, and general corporate
                                            purposes;

 

●our
                                            flexibility in planning for and reacting to changes in our business, the competitive landscape
                                            and the markets in which we operate may be limited; and

 

●we
                                            may be placed at a competitive disadvantage relative to other companies in our industry with
                                            less debt or comparable debt on more favorable terms.

 
Our
ability to make scheduled payments on and to refinance our indebtedness depends on and is subject to our financial and operating performance
and no assurance can be given that our business will generate sufficient cash flow to service our debt.
 


14
 

 
Additionally,
our ability to comply with the financial and other covenants contained in our debt instruments could be affected by, among other things,
changes in our results of operations, the incurrence of additional indebtedness, the pricing of our products, our success at implementing
cost reduction initiatives, our ability to successfully implement our overall business strategy, or changes in industry-specific or general
economic conditions which are beyond our control. The breach of any of these covenants could result in a default or event of default
under our debt instruments, which, if not cured or waived, could result in our being required to repay these borrowings before their
due date. If we are forced to refinance these borrowings on less favorable terms or cannot refinance these borrowings, our prospects,
business, financial condition, results of operations and cash flows could be materially and adversely affected and could cause us to
become bankrupt or otherwise insolvent. In addition, these covenants may restrict our ability to engage in transactions that we believe
would otherwise be in the best interests of our business and stockholders.
 
Increases
in interest rates would increase the cost of servicing our term loan and could reduce our profitability. 
 
As
of March 30, 2024, $400.0 of our term loan was subject to a fixed-rate interest swap but the remaining $275.0 balance of the term loan
bears interest at a variable rate. Future increases in interest rates would increase the cost of servicing the portion of the term loan
not subject to a swap, which could materially reduce our profitability and cash flows.
 
Risk
Factors Related to our Capital Stock
 
Provisions
in our charter documents may prevent or hinder efforts to acquire a controlling interest in us.
 
Provisions
of our certificate of incorporation and bylaws may discourage, delay or prevent a merger, acquisition or other change in control that
stockholders may consider favorable, including transactions that might benefit our stockholders or in which our stockholders might otherwise
receive a premium for their shares. These provisions may also prevent or frustrate attempts by our stockholders to replace or remove
our management.
 
Pursuant
to our charter documents, our Board of Directors (the “Board”) consists of eight members serving staggered three-year terms
and divided into three classes. As a result, two annual meetings are required to change a majority of the Board members.
 
Our
certificate of incorporation authorizes the issuance of 10,000,000 shares of preferred stock, with such designations, rights and preferences
as may be determined from time to time by the Board, without stockholder approval. We utilized this authorization to issue 4,600,000
shares of 5.00% Series A Mandatory Convertible Preferred Stock (“MCPS”) in fiscal 2022. Certain terms of the MCPS could make
an attempt to acquire RBC more difficult or expensive. In the future the Board could authorize the issuance of some or all of the 5,400,000
remaining authorized shares of preferred stock with rights, preferences and privileges that rank equally with the MCPS, or that could
have the effect of discouraging, delaying or preventing a change in control of us, or that could impede our stockholders’ ability
to approve a transaction they consider in their best interests. Although we have no present intention to issue any additional preferred
stock, no assurance can be given that we will not do so in the future. Holders of our common stock do not have preemptive rights to subscribe
for a pro rata portion of preferred stock or any other capital stock that we may issue in the future.
 


15
 

 
We
do not expect to pay cash dividends on our common stock in the foreseeable future and our ability to pay dividends on the MCPS is subject
to various limitations.
 
Except
for a $2.00 per common share special dividend paid in 2014, we have not paid any cash dividends on our common stock and we do not expect
to pay cash dividends on the common stock in the foreseeable future. Instead, we plan to apply earnings and excess cash, if any, to the
service of our debt, the payment of quarterly dividends on the MCPS, and the expansion and development of our business. Thus, any return
on an investment in our common stock would depend solely on an increase, if any, in the market value of the common stock.
 
Our
ability to pay dividends on the MCPS depends on several factors including:
 

●The
                                            amount of cash we have on hand and cash generated by our business;

 

●Our
                                            anticipated financing needs, including our debt service obligations;

 

●The
                                            ability of our subsidiaries to distribute cash to our parent company, which issued the MCPS;

 

●Regulatory
                                            restrictions on our ability to pay dividends, including those under the Delaware General
                                            Corporation Law; and

 

●Contractual
                                            restrictions on our ability to pay dividends, including under our bank credit agreement with
                                            Wells Fargo.

 
ITEM
1B. UNRESOLVED STAFF COMMENTS
 
None
 
ITEM
1C. CYBERSECURITY
 
Cybersecurity
Risk Management and Governance
 
In
response to the increasing threat of continuously evolving cybersecurity risks, we continue to invest in our information technology and
operational technology cybersecurity processes. We maintain a data protection and cybersecurity
risk management program based upon the National Institute of Standards and Technology (“NIST”) Cybersecurity framework to assess,
identify and manage cybersecurity risks. As part of this program, we maintain defensive network perimeter safeguards, internal mitigation
and control features, continuous system and network monitoring, and contingency data protection. The Company ensures regular data and
system backups through planned schedules. We utilize local backups for quick recovery and off-site, off-line and physical backups to
safeguard against disasters. Our cybersecurity program includes steps for assessing the severity of a cybersecurity threat, identifying
the source of a cybersecurity threat including whether the cybersecurity threat is associated with a third-party service provider, implementing
cybersecurity testing, detection, response, prevention and mitigation strategies. We also have
a notification process for real-time escalation of material cyber incidents by members of our internal cybersecurity team to senior management,
including our Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, Corporate Controller, General Counsel and the
Audit Committee of the Board of Directors. The Company’s information security team also engages third-party security consultants
for penetration testing, training and system enhancements. Our Director of Information Technology is responsible for leading global cybersecurity
risk reduction efforts and compliance.
 
The
Audit Committee is responsible for oversight of our risk management with respect to information technology operations and cybersecurity
and oversees risk management in the area of data privacy. As part of this process, the Audit Committee oversees the data protection and
cybersecurity risk management program, which includes reviewing management’s risk assessments and the steps management has taken
to monitor or mitigate our cybersecurity risk exposure. Management regularly provides data protection and cybersecurity reports to the
Audit Committee, which include updates on cybersecurity initiatives, cybersecurity metrics and threat landscape.
 
Despite
our efforts with respect to information technology operations, cybersecurity and data privacy, we have been, and may continue to be,
impacted by breaches in data security and lapses in data privacy, which occur from time to time. During fiscal year 2024, the Company
did not experience any cybersecurity incidents that have materially affected or are reasonably likely to materially affect the Company,
including its business strategy, results of operations or financial condition.
 


16
 

 
ITEM
2. PROPERTIES
 

Our
principal executive office consists of approximately 70,000 square feet located at One Tribology Center, Oxford, Connecticut, which we
own, and our Dodge Industrial subsidiary has approximately 75,000 square feet of office space in Simpsonville, South Carolina, which
we lease.
 
Our
Industrial business segment maintains approximately 1,725,000 square feet of manufacturing space across 14 facilities in California,
Connecticut, Indiana, New Jersey, North Carolina, Ohio, Oklahoma, South Carolina and Tennessee, some of which we own and some of which
we lease. This manufacturing space includes approximately 460,000 square feet in two owned facilities in North Carolina and South Carolina,
and approximately 650,000 square feet in three leased facilities in North Carolina, South Carolina and Tennessee, all of which are used
by Dodge Industrial. The Industrial business segment also maintains approximately 467,000 square feet of manufacturing space across six
leased facilities in China, Mexico, and Switzerland and two owned facilities in Poland and Switzerland.
 
Our
Aerospace/Defense business segment maintain approximately 889,000 square feet of manufacturing space across 14 facilities in Arizona,
California, Connecticut, Georgia, Indiana, South Carolina and Nevada, some of which we own and some of which we lease. This manufacturing
space includes 163,000 square feet in one owned facility in Arizona. The Aerospace/Defense business segment also maintains approximately
108,000 square feet of manufacturing space across two leased facilities in Mexico.
 
We
own or lease approximately 239,000 square feet in three distribution centers located in California, South Carolina, and Tennessee, and
we also lease several sales offices in various locations in the United States, Canada, France, China, Germany India and Australia. We
also utilize third party logistics’ firms located strategically around the world to supplement distribution of our products.
 
We
believe that as the term of each of our leased facilities expires we will be able to either secure a renewal or enter into a lease for
an alternate location on market terms.
 
We
believe that our existing facilities and equipment are generally in good condition, are well maintained and adequate to carry on our
current operations. We also believe that our existing manufacturing facilities have sufficient capacity to meet increased customer demand.
 
ITEM
3. LEGAL PROCEEDINGS 
 
On
March 9, 2022 and March 21, 2023, the Company received civil investigative demands from the United States Department of Justice pursuant
to the False Claims Act, 31 U.S.C. § 3733 (the “FCA”). The investigation concerns allegations that the Company submitted
false claims in connection with (i) certifying that the Company’s employees were eligible for unemployment insurance benefits and
pandemic relief and worked reduced hours and (ii) received grant proceeds in violation of the FCA. The Company is cooperating with the
investigation. As the investigation is in its early stages, it is not possible to determine whether the investigation will have a material
adverse effect, if any, on the Company.
 
Besides
the matter described in the previous paragraph, from time to time we are involved in litigation that arises in the ordinary course of
business, but we do not believe that any such litigation in which we are currently involved, either individually or in the aggregate,
is likely to have a material adverse effect on our business, financial condition, operating results, cash flow or prospects.
 
ITEM
4. MINE SAFETY DISCLOSURES
 
Not
applicable.
 


17
 

 
PART
II
 
ITEM
5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
 
Price
Range of Our Common Stock and Preferred Stock
 
Our
common stock is quoted on the New York Stock Exchange under the symbol “RBC.” As of May 10, 2024, there was one holder of
record of our common stock.
 
The
following table shows the high and low sales prices of our common stock during the periods indicated:
 


  
Fiscal
    2024  
Fiscal
    2023 

  
High  
Low  
High  
Low 

First Quarter 
$236.95  
$195.18  
$202.73  
$152.90 

Second Quarter 
 253.00  
 203.65  
 264.94  
 179.21 

Third Quarter 
 288.16  
 214.14  
 256.29  
 202.13 

Fourth Quarter 
 285.79  
 240.36  
 254.50  
 204.67 

 
The
last reported sale price of our common stock on the New York Stock Exchange on May 10, 2024 was $271.56 per share.
 
The
MCPS (i.e., our outstanding preferred stock) is quoted on the New York Stock Exchange under the symbol “RBCP.” As of
May 10, 2024, there was one holder of record of the MCPS.
 
The
following table shows the high and low sales prices of the MCPS during the periods indicated:
 


  
Fiscal
    2024  
Fiscal
    2023 

  
High  
Low  
High  
Low 

First Quarter 
$112.53  
$98.75  
$102.93  
$81.01 

Second Quarter 
 118.68  
 101.97  
 127.19  
 92.95 

Third Quarter 
 131.99  
 103.29  
 123.15  
 101.39 

Fourth Quarter 
 129.12  
 116.30  
 121.21  
 101.57 

 
The last reported sale price
of the MCPS on the New York Stock Exchange on May 10, 2024 was $122.34 per share.
 


18
 

 
Issuer
Purchases of Equity Securities 
 
In
2019, our Board of Directors authorized us to repurchase up to $100.0 of our common stock from time to time on the open market, in block
trade transactions, and through privately negotiated transactions, in compliance with SEC Rule 10b-18 depending on market conditions,
alternative uses of capital, and other relevant factors. Purchases may be commenced, suspended, or discontinued at any time without prior
notice.
 
Total
share repurchases under the 2019 plan during the fourth quarter of fiscal 2024 are as follows:
 


Period 
Total
    number of 
    shares
    purchased  
Average
    price paid
    per share  
Number
    of
    shares
    purchased
    as part of the 
    publicly
    announced
    program  
Approximate
    dollar value
    of shares still 
    available to be 
    purchased under 
    the program
    (in millions) 

12/31/2023 – 01/27/2024 
 16  
$278.77  
 16  
$63.7 

01/28/2024 – 02/24/2024 
 12,565  
 268.22  
 12,565  
 60.3 

02/25/2024 – 03/30/2024 
 7  
 264.87  
 7  
$60.3 

Total 
 12,588  
$268.23  
 12,588  
   

 
During
the fourth quarter of fiscal 2024, we did not issue any common stock that was not registered under the Securities Act of 1933.
 
Equity
Compensation Plans
 
Information
regarding equity compensation plans required to be disclosed pursuant to this Item is included in Part II, Item 8, Note 17 of this Annual
Report on Form 10-K.
 


19
 

 
Performance
Graph
 
The
following graph shows the total return to our stockholders compared to the Russell 3000 Index and the S&P 400 Industrials (Sector)
(TR) over the period from March 30, 2019 to March 30, 2024. Because of the diversity of our markets and products, we do not believe that
a combination of peer issuers can be selected on an industry or line-of-business basis to provide a meaningful basis for comparing shareholder
return. Accordingly, the Russell 3000 Index, which is comprised of issuers with generally similar market capitalizations to that of the
Company, is included in the graph as permitted by applicable regulations. Each line on the graph assumes that $100 was invested in our
common stock or in the respective indices on March 30, 2019 based on the closing price on that date. The graph then presents the value
of these investments, assuming reinvestment of dividends, through the close of trading on March 30, 2024.
 

 


  
March
    30,
    2019  
March
    28,
    2020  
April
    3,
    2021  
April
    2,
    2022  
April
    1,
    2023  
March
    30,
    2024 

RBC Bearings Incorporated 
$100.00  
$86.50  
$155.81  
$153.77  
$182.98  
$212.54 

Russell 3000 Index 
 100.00  
 89.43  
 149.58  
 166.03  
 151.13  
 195.39 

S&P 400 Industrials (Sector) (TR) 
 100.00  
 78.98  
 154.57  
 159.24  
 165.64  
 224.20 

 
The
cumulative total return shown on the stock performance graph indicates historical results only and may not be indicative of future results.
 
ITEM
6. [RESERVED]
 
Not
applicable.
 
ITEM
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
The
financial and business analysis below provides information that we believe is relevant to an assessment and understanding of our consolidated
financial position, results of operations and cash flows. This financial and business analysis should be read in conjunction with the
consolidated financial statements and related notes. All references to “Notes” in this Item 7 refer to the “Notes to
Consolidated Financial Statements” included in Item 8 of this Annual Report on Form 10-K.
 
The
following discussion contains statements reflecting our views about our future performance that constitute “forward-looking statements”
within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. See the information provided
in Part I, Item 1A. “Risk Factors” of this Annual Report on Form 10-K under the heading “Cautionary Statement as to
Forward-Looking Information.”
 


20
 

 
General
 
We
are a well-known international manufacturer of highly engineered precision bearings, components and essential systems for the industrial,
defense and aerospace industries. Our precision solutions are integral to the manufacture and operation of most machines and mechanical
systems, reduce wear to moving parts, facilitate proper power transmission, and reduce damage and energy loss caused by friction. While
we manufacture products in all major bearing categories, we focus primarily on the higher end of the bearing market where we believe
our value-added manufacturing and engineering capabilities enable us to differentiate ourselves from our competitors and enhance profitability.
We believe our unique expertise has enabled us to garner leading positions in many of the product markets in which we primarily compete.
With 54 facilities in 11 countries, of which 38 are manufacturing facilities, we have been able to significantly broaden our end markets,
products, customer base and geographic reach. We have a fiscal year consisting of 52 or 53 weeks, ending on the Saturday closest to March 31.
Based on this policy, fiscal 2024 had 52 weeks and fiscal 2023 had 52 weeks. We currently operate under two reportable business segments
– Aerospace/Defense and Industrial:
 

●Aerospace/Defense.
                                            This segment represents the end markets for the Company’s highly engineered
                                            bearings and precision components used in commercial aerospace, defense aerospace, and marine
                                            and ground defense applications.

 

●Industrial.
                                            This segment represents the end markets for the Company’s highly engineered
                                            bearings, gearings and precision components used in various industrial applications including:
                                            power transmission; construction, mining, energy and specialized equipment manufacturing;
                                            semiconductor production equipment manufacturing; agricultural machinery, commercial truck
                                            and automotive manufacturing; and tool holding.

 
The
markets for our products are cyclical, and we have endeavored to mitigate this cyclicality by entering into single and sole-source relationships
and long-term purchase agreements, through diversification across multiple market segments within the Aerospace/Defense and Industrial
segments, by increasing sales to the aftermarket, and by focusing on developing highly customized solutions.
 
Currently,
our strategy is built around maintaining our role as a leading manufacturer of highly engineered bearings and precision components through
the following efforts:
 

●Developing
                                            innovative solutions.  By leveraging our design and manufacturing expertise and our
                                            extensive customer relationships, we continue to develop new products for markets in which
                                            there are substantial growth opportunities.

 

●Expanding
                                            customer base and penetrating end markets. We continually seek opportunities to access
                                            new customers, geographic locations and bearing platforms with existing products or profitable
                                            new product opportunities.

 

●Increasing
                                            aftermarket sales. We believe that increasing our aftermarket sales of replacement
                                            parts will further enhance the continuity and predictability of our revenues and enhance
                                            our profitability. Such sales include sales to third party distributors, and sales to OEMs
                                            for replacement products and aftermarket services. We will further increase the percentage
                                            of our revenues derived from the replacement market by continuing to implement several initiatives.

 

●Pursuing
                                            selective acquisitions. The acquisition of businesses that complement or expand our
                                            operations has been and continues to be an important element of our business strategy. We
                                            believe that there will continue to be consolidation within the industry that may present
                                            us with acquisition opportunities.

 
We
have demonstrated expertise in acquiring and integrating bearing and precision engineered component manufacturers that have complementary
products or distribution channels and have provided significant margin enhancement. We have consistently increased the profitability
of acquired businesses through a process of methods and systems improvement coupled with the introduction of complementary and proprietary
new products. Since 1992 we have completed 29 acquisitions, which have broadened our end markets, products, customer base and geographic
reach.
 
Outlook
 
Our
net sales increased 6.2% year over year due to an increase of 20.7% in Aerospace and Defense segment sales and a 0.2% increase in Industrial
segment sales.
 
Aerospace
and Defense segment sales increased 20.7% year over year. Commercial aerospace increased 20.3%, demonstrating the continued recovery
and early stages of a growth cycle. Defense sales, which represent approximately 31.9% of segment sales during the year, were up more
than 21.6% for the year. Our backlog in this end market is significant and deliveries are expected to continue to accelerate in the coming
years.
 


21
 

 
For
the fiscal year ended March 30, 2024, approximately 66.7% of our net sales were attributable to the Industrial segment while the
Aerospace/Defense segment contributed approximately 33.3% of our net sales. For the fourth quarter of fiscal 2024, approximately
65.6% of our net sales were attributable to the Industrial segment compared to approximately 34.4% for the Aerospace/Defense
segment. Approximately $186.8 of Industrial segment sales in the fourth quarter of fiscal 2024 were to distribution and aftermarket
compared to $185.7 in the prior year while approximately $84.5 were made directly to OEMs in the fourth quarter of fiscal 2024
compared to $86.9 in the prior year. Net sales in the Aerospace/Defense segment increased $20.6, or 16.8%, for the fourth quarter of
fiscal 2024 compared to the same period last fiscal year. Commercial aerospace, which consisted of $78.2 of OEM and $19.7 of
distribution and aftermarket, increased by 12.0% compared to the fourth quarter of fiscal 2023 when OEM net sales were $68.8 and
distribution and aftermarket net sales were $18.5. This was driven by a continuing recovery as build rates and orders escalate in
the OEM markets and the aftermarket begins to pick up. Our defense markets, which consisted of $34.2 of OEM and $10.3 of
distribution and aftermarket, increased by 29.0% compared to the fourth quarter of fiscal 2023 when OEM net sales were $28.2 and
distribution and aftermarket net sales were $6.3.
 
The
Company forecasts net sales to be approximately $415.0 to $420.0 in the first quarter of fiscal 2025, compared to $387.1 in the first
quarter of fiscal 2024, which represents a growth rate of 7.2% to 8.5%. 
 
Our
order backlog, as of March 30, 2024, was $726.1 compared to $663.8 as of April 1, 2023. These figures exclude orders from our Sargent
marine and Sargent aerospace businesses that are expected to be fulfilled more than 12 months after the balance sheet dates. Including
all orders from our Sargent marine and Sargent aerospace businesses, our backlog as of March 30, 2024 was $821.5 compared to $759.4 as
of April 1, 2023. This increase reflects continued growth, most notably in our commercial aerospace and marine defense end markets. Beginning
in fiscal year 2025, we will disclose our full backlog for periods presented.
 
We
experienced solid operating cash flow generation during fiscal 2024 (as discussed in the “Liquidity and Capital Resources”
section below). We believe that operating cash flows and available credit under our revolving bank credit facilities will provide adequate
resources to fund internal growth initiatives for the foreseeable future, including at least the next 12 months. As of March 30, 2024,
we had cash and cash equivalents of $63.5, of which, $25.9 was cash held by our foreign operations.
 
Sources
of Revenue
 
A
contract with a customer exists when there is commitment and approval from both parties involved, the rights of the parties are identified,
payment terms are defined, the contract has commercial substance and collectability of consideration is probable. The Company has determined
that the contract with the customer is established when the customer purchase order is accepted or acknowledged. Long-term agreements
(“LTAs”) are used by the Company and certain of its customers to reduce their supply uncertainty for a period of time, typically multiple
years. While these LTAs define commercial terms including pricing, termination rights and other contractual requirements, they do not
represent the contract with the customer for revenue recognition purposes.
 
Approximately
98% of the Company’s revenue was generated from the sale of products to customers in the Industrial and Aerospace/Defense markets
for each of the years ended March 30, 2024 and April 1, 2023. The remaining 2% of the Company’s revenue for each of the last two
fiscal years was derived from services performed for customers, which included repair and refurbishment work performed on customer-controlled
assets as well as design and test work.
 
Refer
to Note 2 for further discussion regarding the Company’s revenue policy.
 
Cost
of Sales
 
Cost
of sales includes employee compensation and benefits, raw materials, outside processing, depreciation of manufacturing machinery and
equipment, supplies and manufacturing overhead.
 
Less
than half of our factory costs, depending on product mix, are attributable to raw materials, purchased components and outside processing.
When we experience raw material inflation, we attempt to offset these cost increases by changing our buying patterns, expanding our vendor
network and passing through price increases when possible. Although we experienced cost inflation on raw material, labor and overhead
for this fiscal year, we were able to mitigate it through pricing and strategic sourcing efforts.
 
We
monitor gross margin performance through a process of monthly operation reviews with all our divisions. We develop new products to target
certain markets allied to our strategies by first understanding volume levels and product pricing and then constructing manufacturing
strategies to achieve defined margin objectives. We only pursue product lines where we believe that the developed manufacturing process
will yield the targeted margins. Management monitors gross margins of all product lines on a monthly basis to determine which manufacturing
processes or prices should be adjusted.
 


22
 

 
Fiscal
2024 Compared to Fiscal 2023
 
Results
of Operations
(amounts
in millions, except share and per share data)
 


  
FY24  
FY23  
$
    Change  
%
    Change 

Net
    sales 
$1,560.3  
$1,469.3  
$91.0  
 6.2%

Net
    income attributable to common stockholders 
$186.9  
$143.8  
$43.1  
 30.1%

Net
    income per common share attributable to common stockholders: Diluted 
$6.41  
$4.94  
    
   

Weighted
    average common shares attributable to common stockholders: Diluted 
 29,189,056  
 29,072,429  
    
   

 
Net
sales for the fiscal year ended March 30, 2024 increased $91.0, or 6.2%, for fiscal 2024 compared to fiscal 2023. This increase in net
sales was the result of an 0.2% increase in our Industrial segment, while sales in our Aerospace/Defense segment increased 20.7% year
over year. Industrial segment sales remain very strong, most notably, in the mining, energy, and general industrial markets. Within Aerospace/Defense,
total commercial aerospace increased 20.3% and defense increased 21.6% year over year. The commercial aerospace increase reflects the
continued recovery in the market over the last year, and what we believe is the start of a growth cycle as aircraft build rates at large
OEMs are expected to escalate in coming years.
 
Net
income attributable to common stockholders increased by $43.1 to $186.9 for fiscal 2024 compared to fiscal 2023. The net income attributable
to common stockholders of $186.9 in fiscal 2024 was impacted by $3.0 of restructuring and consolidation charges incurred, $78.7 of interest
expense, $23.0 of preferred stock dividends and $51.9 of income tax expense. The net income attributable to common stockholders of $143.8
in fiscal 2023 was impacted by $8.8 of transition service agreement (TSA) costs associated with the Dodge acquisition, $2.7 of restructuring
and consolidation charges incurred at some of our plants located in South Carolina, $76.7 of interest expense, $22.9 of preferred stock
dividends and $43.0 of income tax expense.
 
Gross
Margin
 


  
FY24  
FY23  
$
    Change  
%
    Change 

Gross Margin 
$670.5  
$604.8  
$65.7  
 10.9%

Gross Margin % 
 43.0% 
 41.2% 
    
   

 
Gross
margin was 43.0% of sales for fiscal 2024 compared to 41.2% for the same period last year. Gross margin during fiscal 2024 included $0.3
of inventory rationalization costs associated with consolidation efforts at one of our facilities located in California. Gross margin
in fiscal 2023 included $0.2 of inventory rationalization costs associated with consolidation efforts at one of our facilities located
in South Carolina. The expansion in margin during fiscal 2024 reflects the combination of continued cost efficiencies achieved through
integration, product mix, pricing and the ability to maintain appropriate pricing levels while facing an inflationary environment both
as it relates to manufacturing costs and human capital.
 
Selling,
General and Administrative
 


  
FY24  
FY23  
$
    Change  
%
    Change 

SG&A 
$253.5  
$229.7  
$23.8  
 10.4%

% of net sales 
 16.2% 
 15.6% 
    
   

 
SG&A
expenses increased by $23.8 to $253.5 for fiscal 2024 compared to fiscal 2023. The increase in SG&A was primarily driven by personnel
costs, IT costs and other professional fees.
 
Other,
Net
 


  
FY24  
FY23  
$
    Change  
%
    Change 

Other, net 
$74.8  
$82.1  
$(7.3) 
 (8.9)%

% of net sales 
 4.8% 
 5.6% 
    
   

 


23
 

 
Other
operating expenses for fiscal 2024 totaled $74.8 compared to $82.1 for fiscal 2023. For fiscal 2024, other operating costs consisted
primarily of $70.4 of amortization expense, $2.7 of plant consolidation and restructuring costs, $0.2 of bad debt expense, $0.3 of acquisition
costs, $0.6 of losses on disposal of assets, and $0.6 of other items. For fiscal 2023, other operating expenses were comprised of $8.9
of TSA costs and other costs associated with the Dodge acquisition, $69.1 of amortization expense, $2.5 of plant consolidation and restructuring
costs, $0.8 of bad debt expense, $0.3 of asset impairments, $0.3 of losses on disposal of assets, and $0.2 of other items.
 
Interest
Expense, Net
 


  
FY24  
FY23  
$
    Change  
%
    Change 

Interest expense 
$78.7  
$76.7  
$2.0  
 2.6%

% of net sales 
 5.0% 
 5.2% 
    
   

 
Interest expense, net, consists
of interest charged on the Company’s debt agreements and amortization of deferred financing fees, offset by interest income. Interest
expense, net was $78.7 for fiscal 2024 compared to $76.7 for fiscal 2023 as a result of additional interest on our variable rate debt.
Though interest rates have steadily increased since the beginning of fiscal 2023, the interest rate swap that we entered into that year
(see “Liquidity and Capital Resources” below) has enabled us to manage interest costs as approximately 75% of our debt bears
interest at a fixed rate, after giving effect to the interest rate swap agreement in place.
 
Other
Non-Operating Expense
 
  
FY24  
FY23  
$
    Change  
%
    Change 

Other non-operating
    expense 
$1.7  
$6.6  
$(4.9) 
 (74.0)%

% of net sales 
 0.1% 
 0.4% 
    
   

 
Other
non-operating expense for fiscal 2024 totaled $1.7, consisting primarily of post-retirement benefit costs. Non-operating costs incurred
during fiscal 2023 were $6.6, consisting primarily of costs associated with post-retirement benefit plans led by a $4.3 settlement loss
related to the derecognition of $15.6 of pension liabilities and $15.6 of pension assets resulting from an annuity contract executed
in March 2023.
 
Income
Taxes
 


  
FY24  
FY23 

Income tax expense 
$51.9  
$43.0 

Effective tax rate with discrete items 
 19.8% 
 20.5%

Effective tax rate without discrete items 
 22.9% 
 22.9%

 
Income
tax expense for fiscal 2024 was $51.9 compared to $43.0 for fiscal 2023. Our effective income tax rate for fiscal 2024 was 19.8% compared
to 20.5% for fiscal 2023. The effective income tax rates are different from the U.S. statutory rate due to the U.S. credits for increasing
research activities and foreign-derived intangible income provision which decrease the rate and differences in foreign and state income
taxes which increase the rate. The effective income tax rate for fiscal 2024 of 19.8% included discrete items totaling a benefit of $8.2
which is substantially related to a benefit associated with stock-based compensation, a reduction in unrecognized tax benefits due to
the expiration of the statute of limitations, and the accrual of deferred tax assets related to state tax modifications. The effective
income tax rate for fiscal 2024 without these discrete items would have been 22.9%. The effective income tax rate for fiscal 2023 of
20.5% included discrete items of $5.1 of benefit comprised substantially of a benefit associated with stock-based compensation and a
reduction in unrecognized tax benefits partially due to the expiration of the statute of limitations. The effective income tax rate for
fiscal 2023 without these discrete items would have been 22.9%.
 
Global
Minimum Tax
 
In
October 2021, the Organisation for Economic Co-operation and Development (“OECD”) announced an Inclusive Framework on Base
Erosion and Profit Shifting including Pillar Two Model Rules defining the global minimum tax, which calls for the taxation of large multinational
corporations at a minimum rate of 15%. Subsequently multiple sets of administrative guidance have been issued. Many non-US tax jurisdictions
have either recently enacted legislation to adopt certain components of the Pillar Two Model Rules beginning in 2024 with the adoption
of additional components in later years or announced their plans to enact legislation in future years. We are continuing to evaluate
the impacts of enacted legislation and pending legislation to enact Pillar Two Model Rules in the non-US tax jurisdictions in which we
operate.
 


24
 

 
Segment
Information
 
We
report our financial results under two operating segments: Aerospace/Defense and Industrial. We use gross margin as the primary measurement
to assess the financial performance of each reportable segment.
 
Aerospace/Defense
Segment:
 


  
FY24  
FY23  
$
    Change  
%
    Change 

Net sales 
$519.4  
$430.3  
$89.1  
 20.7%

  
    
    
    
   

Gross margin 
$208.8  
$171.0  
$37.8  
 22.2%

Gross margin % 
 40.2% 
 39.7% 
    
   

  
    
    
    
   

SG&A 
$37.8  
$31.1  
$6.7  
 21.7%

% of segment net sales 
 7.3% 
 7.2% 
    
   

 
Net sales increased $89.1,
or 20.7%, for fiscal 2024 compared to fiscal 2023. Commercial aerospace, which consisted of $278.5 of OEM and $75.3 of distribution and
aftermarket, increased by 20.3% compared to fiscal 2023 when OEM net sales were $234.4 and distribution and aftermarket net sales were
$59.7. This was driven by a continuing recovery as build rates and orders escalated in the OEM markets and the aftermarket began to pick
up. Our defense markets, which consisted of $135.3 of OEM and $30.3 of distribution and aftermarket, increased by 21.6% compared to fiscal
2023 when OEM net sales were $110.3 and distribution and aftermarket net sales were $25.9.
 
During the year, we saw
improvement in the sales and order volume to our commercial aerospace customers as aircraft build rates continued to grow. Our
backlog and recent results reflect the early stages of this process which we expect to continue to see in upcoming quarters. Our
defense markets, which represented about 31.9% of sales, increased by approximately 21.6% during the period, driven by increased
sales and order volume in the marine and helicopter end markets. Overall distribution and aftermarket sales, which represent 20.3%
of segment sales, were up 23.4% year over year.
 
Gross
margin was $208.8, or 40.2% of net sales, in fiscal 2024 compared to $171.0, or 39.7% of sales, for the same period in fiscal 2023. We
anticipate margin expansion in the next year as the increasing orders on commercial products add volume through our plants driving cost
efficiencies.
 
Industrial
Segment:
 


  
FY24  
FY23  
$
    Change  
%
    Change 

Net sales 
$1,040.9  
$1,039.0  
$1.9  
 0.2%

  
    
    
    
   

Gross margin 
$461.7  
$433.8  
$27.9  
 6.4%

Gross margin % 
 44.4% 
 41.8% 
    
   

  
    
    
    
   

SG&A 
$132.8  
$122.5  
$10.3  
 8.4%

% of segment net sales 
 12.8% 
 11.8% 
    
   

 
Net sales increased $1.9,
or 0.2%, during fiscal 2024 compared to the same period last year. The continued strong performance was driven by the energy, mining,
and general industrial markets. Sales to distribution and the aftermarket were $707.6 in fiscal 2024 compared to $691.7 in the prior year,
a 2.3% year over year increase. OEM sales were $333.3 for fiscal 2024 compared to $347.3 in the prior year. The 4.0% decrease in OEM sales
compared to the prior year was primarily due to some softness in the semicon end market.
 
Gross
margin was $461.7, or 44.4% of net sales, in fiscal 2024 compared to $433.8, or 41.8% of sales, for the same period in fiscal 2023. The
gross margin for the fiscal 2023 included the unfavorable impact of $0.2 associated with inventory rationalization costs at one of our
plants in South Carolina. The expansion in margin year over year was led by cost efficiencies achieved through synergy, product mix,
and maintenance of appropriate pricing levels to offset the inflationary environment primarily driven by the cost of materials, energy
and human capital.
 


25
 

 
Corporate:
 


  
FY24  
FY23  
$
    Change  
%
    Change 

SG&A 
$82.9  
$76.1  
$6.8  
 9.0%

% of total net sales 
 5.3% 
 5.2% 
    
   

 
Corporate
SG&A increased $6.8 or 9.0% for fiscal 2024 compared to fiscal 2023 due to increased spend in IT and personnel-related costs. As
a percentage of net sales, Corporate SG&A was relatively flat year over year.
 
Liquidity
and Capital Resources
 
Our
business is capital-intensive. Our capital requirements include manufacturing equipment and materials. In addition, we have historically
fueled our growth, in part, through acquisitions. We have historically met our working capital, capital expenditure requirements and
acquisition funding needs through our net cash flows provided by operations, various debt arrangements and sale of equity to investors.
We believe that operating cash flows and available credit under our revolving bank credit facilities will provide adequate resources
to fund internal growth initiatives for the foreseeable future.
 
Our
ability to meet future working capital, capital expenditures and debt service requirements will depend on our future financial performance,
which will be affected by a range of economic, competitive and business factors, particularly interest rates, cyclical changes in our
end markets and prices for steel and our ability to pass through price increases on a timely basis, many of which are outside of our
control. In addition, future acquisitions could have a significant impact on our liquidity position and our need for additional funds.
 
From
time to time, we evaluate our existing facilities and operations and their strategic importance to us. If we determine that a given facility
or operation does not have future strategic importance, we may sell, relocate, consolidate or otherwise dispose of those operations.
Although we believe our operations would not be materially impaired by such dispositions, relocations or consolidations, we could incur
significant cash or non-cash charges in connection with them.
 
Liquidity
 
As
of March 30, 2024, we had cash and cash equivalents of $63.5, of which, approximately $25.9 was cash held by our foreign operations.
We expect that our undistributed foreign earnings will be re-invested indefinitely for working capital, internal growth and acquisitions
for and by our foreign subsidiaries. As discussed in further detail below, we also have the ability to borrow money from our existing
credit facilities.
 
Domestic
Credit Facility
 
In
fiscal 2022, RBC Bearings Incorporated, our top holding company, and our Roller Bearing Company of America, Inc. subsidiary (“RBCA”)
entered into a Credit Agreement (the “Credit Agreement”) with Wells Fargo Bank, National Association (“Wells Fargo”),
as Administrative Agent, Collateral Agent, Swingline Lender and Letter of Credit Issuer and the other lenders party thereto. The Credit
Agreement provides the Company with (a) a $1,300.0 term loan (the “Term Loan”), which was used to fund a portion of the cash
purchase price for the acquisition of Dodge Industrial, Inc. (“Dodge”) and to pay related fees and expenses, and (b) a $500.0
revolving credit facility (the “Revolving Credit Facility” and together with the Term Loan, the “Facilities”).
Debt issuance costs associated with the Credit Agreement totaled $14.9 and are being amortized over the life of the Credit Agreement.
 
Initially,
amounts outstanding under the Facilities generally bore interest at either, at the Company’s option, (a) a base rate determined
by reference to the higher of (i) Wells Fargo’s prime lending rate, (ii) the federal funds effective rate plus 1/2 of 1.00% and
(iii) the one-month LIBOR rate plus 1.00% or (b) the LIBOR rate plus a specified margin, depending on the type of borrowing being made.
The applicable margin was based on the Company’s consolidated ratio of total net debt to consolidated EBITDA (as defined within
the Credit Agreement) from time to time. In December 2022, the Credit Agreement was amended to replace LIBOR with the secured overnight
financing rate administered by the Federal Reserve Bank of New York (“SOFR”) so that borrowings under the Facilities denominated
in U.S. dollars bear interest at a rate per annum equal to Term SOFR (as defined in the Credit Agreement) plus a credit spread adjustment
of 0.10% plus a margin ranging from 0.75% to 2.00% depending on the Company’s consolidated ratio of total net debt to consolidated
EBITDA. The Facilities are subject to a SOFR floor of 0.00%. As of March 30, 2024, the Company’s margin was 1.25% for SOFR loans,
the commitment fee rate was 0.20%, and the letter of credit fee rate was 1.25%. A portion of the Term Loan is subject to a fixed-rate
interest swap as discussed in Note 13.
 
The
Term Loan matures in November 2026 and amortizes in quarterly installments with the balance payable on the maturity date. The Company
can elect to prepay some or all of the outstanding balance from time to time without penalty, which will offset future quarterly amortization
installments. Due to prepayments previously made, the required future principal payments on the Term Loan are $0 for fiscal 2025, $0
for fiscal 2026, and $675.0 for fiscal 2027. The Revolving Credit Facility expires in November 2026, at which time all amounts outstanding
under the Revolving Credit Facility will be payable.
 
The
Credit Agreement requires the Company to comply with various covenants, including the following financial covenants: (a) a maximum Total
Net Leverage Ratio (as defined within the Credit Agreement) of 5.00:1.00, which maximum Total Net Leverage Ratio shall decrease during
certain subsequent test periods as set forth in the Credit Agreement (provided that, no more than once during the term of the Facilities,
such maximum ratio applicable at such time may be increased by the Company by 0.50:1.00 for a period of twelve (12) months after the
consummation of a material acquisition); and (b) a minimum Interest Coverage Ratio of 2.00:1.00. As of March 30, 2024 the Company was
in compliance with all debt covenants.
 
The
Credit Agreement allows the Company to, among other things, make distributions to stockholders, repurchase its stock, incur other debt
or liens, or acquire or dispose of assets provided that the Company complies with certain requirements and limitations of the Credit
Agreement.
 

26
 

 The
                                            Company’s domestic subsidiaries have guaranteed the Company’s obligations under
                                            the Credit Agreement, and the Company’s obligations and the domestic subsidiaries’
                                            guaranty are secured by a pledge of substantially all of the assets of the Company and its
                                            domestic subsidiaries.
 
As
of March 30, 2024, $675.0 was outstanding under the Term Loan, $3.7 of the Revolving Credit Facility was being utilized to provide letters
of credit to secure the Company’s obligations relating to certain insurance programs, and $18.0 of the Revolving Credit Facility
had been used to fund the purchase of the business assets of Specline, Inc. which is discussed in Note 9. The Company had the ability
to borrow up to an additional $478.3 under the Revolving Credit Facility as of March 30, 2024.

 
Senior
Notes
 
In
fiscal 2022, RBCA issued $500.0 aggregate principal amount of 4.375% Senior Notes due 2029 (the “Senior Notes”). The net
proceeds from the issuance of the Senior Notes were approximately $492.0, after deducting initial purchasers’ discounts and commissions
and offering expenses, and were used to fund a portion of the purchase price for the acquisition of Dodge.
 
The
Senior Notes were issued pursuant to an indenture with Wilmington Trust, National Association, as trustee (the “Indenture”).
The Indenture contains covenants limiting the ability of the Company to (i) incur additional indebtedness or guarantee indebtedness,
(ii) declare or pay dividends, redeem stock or make other distributions to stockholders, (iii) make investments, (iv) create liens or
use assets as security in other transactions, (v) merge or consolidate, or sell, transfer, lease or dispose of substantially all of its
assets, (vi) enter into transactions with affiliates, and (vii) sell or transfer certain assets. These covenants contain various exceptions,
limitations and qualifications. At any time that the Senior Notes are rated investment grade, certain of these covenants will be suspended.
 
The
Senior Notes are guaranteed jointly and severally on a senior unsecured basis by RBC Bearings and certain of RBCA’s existing and
future wholly-owned domestic subsidiaries that also guarantee the Credit Agreement.
 
Interest
on the Senior Notes accrues at a rate of 4.375% and is payable semi–annually in cash in arrears on April 15 and October 15 of each
year.
 
The
Senior Notes will mature on October 15, 2029. The Company may redeem some or all of the Senior Notes at any time on or after October
15, 2024 at the redemption prices set forth in the Indenture, plus accrued and unpaid interest, if any, to, but excluding, the redemption
date. The Company may also redeem up to 40% of the Senior Notes using the proceeds of certain equity offerings completed before October
15, 2024, at a redemption price equal to 104.375% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but
excluding, the redemption date. In addition, at any time prior to October 15, 2024, the Company may redeem some or all of the Senior
Notes at a price equal to 100% of the principal amount, plus a “make–whole” premium, plus accrued and unpaid interest,
if any, to, but excluding, the redemption date. If the Company sells certain of its assets or experiences specific kinds of changes in
control, the Company must offer to purchase the Senior Notes.
 


27
 

 
Foreign
Borrowing Arrangements
 
One
of our foreign subsidiaries, Schaublin SA, has a CHF 5.0 (approximately $5.8 USD) credit line (the “Foreign Credit Line”)
with Credit Suisse (Switzerland) Ltd. to provide future working capital, if necessary. As of March 30, 2024, $2.2 had been borrowed from
the Foreign Credit Line and $0.1 was being utilized to provide a bank guarantee. Fees associated with the Foreign Credit Line are nominal.

 
Interest
Rate Swap 
 
In
fiscal 2023, the Company entered into a three-year USD-denominated interest rate swap (“the Swap”) from a third-party financial
counterparty under the Credit Agreement. The Swap was executed to protect the Company from interest rate volatility on our variable-rate
Term Loan Facility. The Swap became effective December 30, 2022 and is comprised of a $600.0 notional with a maturity of three years.
We receive a variable rate based on one-month Term SOFR and pay a fixed rate of 4.455%. As of March 30, 2024, approximately 75% of our
debt bore interest at a fixed rate after giving effect to the Swap in place. The notional on the Swap will amortize as follows:
 
Year
1: $600.0
 
Year
2: $400.0
 
Year
3: $100.0
 
The
Swap has been designated as a cash flow hedge of the variability of the first unhedged interest payments (the hedged transactions) paid
over the hedging relationship’s specified time period of three years attributable to the borrowing’s contractually specified
interest index on the hedged principal of its general borrowing program or replacement or refinancing thereof.
 
Cash
Flows
 
Fiscal
2024 Compared to Fiscal 2023
 
The
following table summarizes our cash flow activities:
 


  
FY24  
FY23  
$
    Change 

Net cash provided by (used in): 
   
   
  

Operating activities 
$274.7  
$220.6  
$54.1 

Investing activities 
 (52.2) 
 (14.0) 
 (38.2)

Financing activities 
 (223.5) 
 (322.8) 
 99.3 

Effect of exchange
    rate changes on cash 
 (0.9) 
 (1.3) 
 0.4 

(Decrease)/increase in cash and cash equivalents 
$(1.9) 
$(117.5) 
$115.6 

 
During
fiscal 2024, we generated cash of $274.7 from operating activities compared to $220.6 for fiscal 2023. The increase of $54.1 was mainly
the result of a $43.2 increase in net income and a $12.4 favorable change in non-cash activity partially offset by a net unfavorable
change in operating assets and liabilities of $1.5. The unfavorable change in operating assets and liabilities is detailed in the table
below. The change in non-cash activity was primarily driven by $3.9 more depreciation and amortization, $3.4 more stock-based compensation
and a favorable change in deferred taxes of $9.1, partially offset by $4.2 less amortization of deferred financing costs.
 


28
 

 
The
following chart summarizes the impact on cash flow from operating assets and liabilities for fiscal 2024 versus fiscal 2023.
 


  
FY24  
FY23 

Cash provided by (used in): 
   
  

Accounts receivable 
$(13.4) 
$7.8 

Inventory 
 (31.6) 
 (71.7)

Prepaid expenses and other current assets 
 (2.4) 
 (5.8)

Other noncurrent assets 
 (3.0) 
 (0.8)

Accounts payable 
 (30.7) 
 (11.1)

Accrued expenses and other current liabilities 
 9.0  
 6.0 

Other noncurrent liabilities 
 (0.5) 
 4.5 

Total change in operating assets and liabilities 
$(72.6) 
$(71.1)

 
During
fiscal 2024, we used $52.2 for investing activities as compared to $14.0 for fiscal 2023. This increase in cash used was primarily attributable
to $19.3 of cash used for acquisitions in fiscal 2024 compared to a favorable purchase price adjustment of $27.5 in fiscal 2023. This
was partially offset by $8.8 fewer capital expenditures in fiscal 2024 compared to fiscal 2023.
 
During
fiscal 2024, we used cash of $223.5 for financing activities compared to $322.8 in fiscal 2023. This favorable change was primarily due
to $8.8 more proceeds from exercises of employee stock options, $20.3 of proceeds received from our revolving credit facilities and $75.0
less repayment of debt compared to the prior year.
 
Capital
Expenditures
 
Our
capital expenditures in fiscal 2024 were $33.2 compared to $42.0 in fiscal 2023. We expect to make capital expenditures of approximately
3.0% to 3.5% of net sales during fiscal 2025 in connection with our existing business. We funded our fiscal 2024 capital expenditures,
and expect to fund fiscal 2025 capital expenditures, principally through existing cash and internally generated funds. We may also make
substantial additional capital expenditures in connection with acquisitions.
 
Critical
Accounting Policies and Estimates
 
Our
discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which
have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires
us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure
of contingent assets and liabilities. We evaluate our estimates on an on-going basis. Estimates are used for, but not limited to, the
accounting for the allowance for doubtful accounts, valuation of inventories, goodwill and intangible assets, depreciation and amortization,
income taxes and tax reserves, the valuation of options and the valuation of business combinations. We base our estimates on historical
experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We believe
our judgments related to these accounting estimates are appropriate. Actual results may differ from these estimates under different assumptions
or conditions.
 
Revenue
Recognition. The performance obligations for the majority of RBC’s product sales are satisfied at the point in time in which
the products are shipped. The Company has determined that the customer obtains control upon shipment of the product based on the shipping
terms (i.e. when it ships from RBC’s dock or when the product arrives at the customer’s dock) and recognizes revenue when
control has transferred to the customer. Once a customer has obtained control, the customer is able to direct the use of, and obtain
substantially all of the remaining benefits from, the asset. Approximately 98% of the Company’s revenue was recognized in this
manner based on sales for the fiscal years ended March 30, 2024 and April 1, 2023.
 
The
Company has determined performance obligations are satisfied over time for customer contracts where RBC provides services to customers
and also for a limited number of product sales. RBC has determined revenue recognition over time is appropriate for our service revenue
contracts as they create or enhance an asset that the customer controls throughout the duration of the contract. Approximately 2% of
the Company’s revenue was recognized in this manner based on sales for the fiscal years ended March 30, 2024 and April 1, 2023.
Revenue recognition over time is appropriate for customer contracts with product sales in which the product sold has no alternative use
to RBC without significant economic loss and an enforceable right to payment exists, including a normal profit margin from the customer,
in the event of contract termination. These types of contracts comprised less than 1% of total sales for the fiscal years ended March
30, 2024 and April 1, 2023. For both of these types of contracts, revenue is recognized over time based on the extent of progress towards
completion of the performance obligation. The Company utilizes the cost-to-cost measure of progress for over-time revenue recognition
contracts as we believe this measure best depicts the transfer of control to the customer, which occurs as we incur costs on contracts.
Revenues, including profits, are recorded proportionally as costs are incurred. Costs to fulfill include labor, materials, subcontractors’
costs, and other direct and indirect costs.
 


29
 

 
Pursuant
to the over-time revenue recognition model, revenue may be recognized prior to the customer being invoiced. An unbilled receivable is
recorded to reflect revenue that is recognized when (1) the cost-to-cost method is applied and (2) such revenue exceeds the amount invoiced
to the customer. Contract assets are included within prepaid expenses and other current assets or other noncurrent assets on the consolidated
balance sheets.
 
Inventory.
Inventory is stated at the lower of cost or net realizable value. Cost is determined by the first-in, first-out method. We account
for inventory under a full absorption method. We record adjustments to the value of inventory based upon past sales history and forecasted
plans to sell our inventories. The physical condition, including age and quality, of the inventories is also considered in establishing
its valuation. These adjustments are estimates, which could vary significantly, either favorably or unfavorably, from actual requirements
if future economic conditions, customer inventory levels or competitive conditions differ from our expectations.
 

Goodwill and Indefinite-Lived
Intangible Assets. Goodwill (representing the excess of the amount paid to acquire a company over the estimated fair value of the
net assets acquired) and indefinite-lived intangible assets are not amortized but instead are tested for impairment annually, or when
events or circumstances indicate that the carrying value of such asset may not be recoverable. Separate tests are performed for goodwill
and indefinite lived intangible assets. We completed a quantitative test of impairment on the indefinite lived intangible assets with
no impairment noted in fiscal year 2024. The determination of any goodwill impairment is made at the reporting unit level. The Company
determines the fair value of a reporting unit and compares it to its carrying amount. If the carrying amount of the reporting unit exceeds
its fair value, an impairment loss is recognized for any amount by which the carrying amount exceeds the reporting unit’s fair value.
The Company applies the income approach (discounted cash flow method) in testing goodwill for impairment. The key assumptions used in
the discounted cash flow method used to estimate fair value include the discount rates, revenue growth rates and EBITDA margin which
are affected by expectations about future market or economic conditions. Discount rates, revenue growth rates and EBITDA margin are the
most sensitive and susceptible to change as they require significant management judgment. Discount rates are determined by using a weighted
average cost of capital (“WACC”). The WACC considers market and industry data as well as Company-specific risk factors for
each reporting unit in determining the appropriate discount rate to be used. The discount rate utilized for each reporting unit for our
fiscal 2024 test was 10.0% and is indicative of the return an investor would expect to receive for investing in such a business. Terminal
growth rate determination follows common methodology of capturing the present value of perpetual cash flow estimates beyond the last
projected period assuming a constant WACC and long-term growth rates. The terminal growth rate used for our fiscal 2024 test was 2.5%.
The Company has determined that, to date, no impairment of goodwill exists and fair value of the reporting units exceeded the carrying
value in total by approximately 53.5%. The fair value of the reporting units exceeds the carrying value by a minimum of 18.8% at each
of the two reporting units. A decrease of 1.0% in our terminal growth rate would not result in impairment of goodwill for any of our
reporting units. An increase of 1.0% in our discount rate would not result in impairment of goodwill for any of our reporting units.
Assuming no growth in EBITDA margin within the model would not result in impairment of goodwill for any of our reporting units. The Company
performs the annual impairment testing during the fourth quarter of each fiscal year. Although no changes are expected, if the actual
results of the Company are less favorable than the assumptions the Company makes regarding estimated cash flows, the Company may be required
to record an impairment charge in the future.

 

Valuation of Business
Combinations. We allocate the amounts we pay for each acquisition to the assets we acquire and liabilities we assume based on their
estimated fair values at the date of acquisition, including identifiable intangible assets, which either arise from a contractual or
legal right or are separable from goodwill. We base the fair value of identifiable intangible assets acquired in a business combination
on detailed valuations which are prepared with the assistance of a specialist and consider our best estimates of inputs and assumptions
that a market participant would use. We utilize a specialist for these valuations due to the complexity and estimation uncertainty involved
in determining the fair value given the significant assumptions involved. Significant assumptions utilized in the valuation models include
discount rates, revenue growth rates and EBITDA margins. We allocate to goodwill any excess purchase price over the fair value of the
net tangible and identifiable intangible assets acquired. Transaction costs associated with these acquisitions are expensed as incurred
through other, net on the consolidated statements of operations.

 
Income
Taxes. As part of the process of preparing the consolidated financial statements, we are required to estimate the income taxes in
each jurisdiction in which we operate. This process involves estimating the actual current tax liabilities together with assessing temporary
differences resulting from the differing treatment of items for tax and financial reporting purposes. These differences result in deferred
tax assets and liabilities, which are included in the consolidated balance sheets. We must then assess the likelihood that the deferred
tax assets will be recovered, and to the extent that we believe that recovery is not more than likely, we are required to establish a
valuation allowance. If a valuation allowance is established or increased during any period, we are required to include this amount as
an expense within the tax provision in the consolidated statements of operations. Significant judgment is required in determining our
provision for income taxes, deferred tax assets and liabilities, accrual for uncertain tax positions and any valuation allowance recognized
against net deferred tax assets.
 


30
 

 
Recent
Accounting Pronouncements
 
For a discussion of recent
accounting pronouncements, refer to Note 2.

 
Impact
of Inflation and Changes in Prices of Raw Materials
 
In fiscal 2024, the economy
experienced inflation. We purchase steel at market prices, which fluctuate as a result of supply and demand in the marketplace. To date,
we have managed price increases by changing our buying patterns, expanding our vendor network, and passing increases on to our customers
through price increases on our products, the assessment of steel surcharges on our customers, or entry into LTAs with our customers containing
escalator provisions tied to our invoiced price of steel. However, even if we are able to pass these cost increases to our customers,
there may be a time lag of several months between the time we experience a cost increase and when we implement surcharges or price
increases, particularly for orders already in our backlog. As a result, our gross margin percentage may decline.
 
Competitive
pressures and the terms of certain of our long-term contracts may require us to absorb at least part of these cost increases, particularly
during periods of high inflation. Our principal raw materials are stainless and 52100 wire and rod steel (types of high alloy steel),
which have historically been readily available. We have never experienced a work stoppage due to a supply shortage. We maintain multiple
sources for raw materials including steel and have various supplier agreements. Through sole-source arrangements, supplier agreements
and pricing, we have been able to minimize our exposure to fluctuations in raw material prices.
 

Our suppliers and sources
of raw materials are based in the U.S., Europe and Asia. We believe that our sources are adequate for our needs in the foreseeable
future, that there exist alternative suppliers for our raw materials, and that in most cases readily available alternative materials
can be used for most of our raw materials.

 
Off-Balance
Sheet Arrangements
 

The Company has $3.7 of outstanding
standby letters of credit, all of which are under the Revolving Credit Facility. We also have a contractual obligation for licenses related
to the implementation and upgrade of an enterprise resource planning (“ERP”) system. The remaining contractual obligation
related to these ERP license costs of $7.6 will end in June of 2026.

 
Other
than the items noted above, we had no significant off-balance sheet arrangements as of March 30, 2024.
 


31
 

 
ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
We
are exposed to market risks, which arise during the normal course of business from changes in interest rates and foreign currency exchange
rates.
 

Interest Rates. We
currently have variable rate debt outstanding under the Term Loan Facility. We regularly evaluate the impact of interest rate changes
on our net income and cash flow and take action to limit our exposure when appropriate. As discussed in “Liquidity and Capital
Resources” in Item 7 of this Annual Report, we have utilized an interest rate swap to fix a portion of the variable rate interest
expense associated with the Term Loan. As of March 30, 2024, approximately 75% of our debt bears interest at a fixed rate after giving
effect to the interest rate swap agreement in place.

 
Foreign
Currency Exchange Rates. As an international company, our operations transact in the following foreign currencies:
 


 
●  Australia –
    Australian dollar
 
●  India – rupee

 
 
 
 

 
●  Canada – Canadian dollar
 
●  Mexico – peso

 
 
 
 

 
●  China – Chinese yuan
 
●  Poland – zloty

 
 
 
 

 
●  France and Germany –
    euro
 
●  Switzerland – Swiss
    franc

 
 
 
 

 
●  England – British pound
 
 

 
As
a result, we are exposed to risk associated with fluctuating currency exchange rates between the U.S. dollar and these currencies. Foreign
currency transaction gains and losses are included in earnings. Approximately 12% of our net sales were impacted by foreign currency
fluctuations in fiscal 2024 compared to approximately 12% of net sales in fiscal 2023. For those countries outside the U.S. where we
have sales, a strengthening in the U.S. dollar or devaluation in the local currency would reduce the value of our local inventory as
presented in our consolidated financial statements. In addition, a stronger U.S. dollar or a weaker local currency would result in reduced
net sales, operating profit and shareholders’ equity due to the impact of foreign exchange translation on our consolidated financial
statements. Fluctuations in foreign currency exchange rates may make our products more expensive or increase our operating costs, affecting
our competitiveness and our profitability.
 
Changes
in exchange rates between the U.S. dollar and other currencies and volatile economic, political and market conditions in emerging market
countries have in the past adversely affected our financial performance and may in the future adversely affect the value of our assets
located outside the United States and our results of operations.
 

We periodically enter into
derivative financial instruments in the form of forward exchange contracts to reduce the effect of fluctuations in exchange rates on
certain third-party sales and purchase transactions denominated in non-functional currencies. As of March 30, 2024, the Company had no
forward exchange contracts.

 


32
 

 
ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
Report
of Independent Registered Public Accounting Firm
 
To
the Stockholders and the Board of Directors of RBC Bearings Incorporated
 
Opinion
on the Financial Statements
 

We have audited the accompanying consolidated
balance sheets of RBC Bearings Incorporated (the Company) as of March 30, 2024 and April 1, 2023, the related consolidated statements
of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended March
30, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the
consolidated financial statements present fairly, in all material respects, the financial position of the Company at March 30, 2024 and
April 1, 2023, and the results of its operations and its cash flows for each of the three years in the period ended March 30, 2024, in
conformity with U.S. generally accepted accounting principles.

 

We also have audited, in accordance with the
standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting
as of March 30, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 framework), and our report dated May 17, 2024 expressed an unqualified opinion thereon.

 
Basis
for Opinion 
 

These financial statements are the responsibility
of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits.
We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance
with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 
We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits
included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud,
and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts
and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a
reasonable basis for our opinion.
 
Critical
Audit Matter
 
The
critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated
or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial
statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter
does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the
critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosures to which it relates.
 


33
 

 


 
 
Valuation
    of Goodwill – Annual impairment evaluation

 
 
 

Description of the Matter
 

At March 30, 2024, the Company’s
goodwill was $1,874.9 million. As discussed in Notes 2 and 10 of the consolidated financial statements, goodwill is tested for impairment
at the reporting unit level annually, or when events or circumstances indicate that the carrying value of such asset may not be recoverable.
The Company estimates the fair value of its reporting units using an income approach, specifically a discounted cash flow analysis.
  
Auditing
    management’s annual goodwill impairment test was complex and highly judgmental due to the significant estimation required to
    determine the fair value of the reporting units. The fair value estimates were sensitive to changes in significant assumptions such
    as the discount rates, revenue growth rates and EBITDA margin which are affected by expectations about
    future market or economic conditions.
 

How We Addressed the Matter
    in Our Audit
 
We
        obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s goodwill
        impairment review process, including controls over management’s review of the significant assumptions described above.
 
To
    test the estimated fair value of the Company’s reporting units, we performed audit procedures, with the assistance of our valuation
    specialists, that included, among others, assessing the methodologies utilized and testing the significant assumptions discussed
    above and the underlying data used by the Company in its analysis. We compared the significant assumptions used by management to
    current industry and economic trends. We assessed the historical accuracy of management’s estimates and performed sensitivity
    analyses of significant assumptions to evaluate the changes in the fair value of the reporting units that would result from changes
    in the underlying assumptions. In addition, we evaluated the reconciliation of the fair value of the reporting units to the market
    capitalization of the Company. 

 
/s/
Ernst & Young LLP
 
We
have served as the Company’s auditor since 2002.
 
Stamford,
Connecticut
May
17, 2024
 


34
 


 
RBC Bearings Incorporated
Consolidated Balance
Sheets
(amounts in millions, except share and per
share data)
 


  
March
                                            30, 2024   
April
                                            1, 2023  

ASSETS 
   
  

Current assets: 
   
  

Cash and cash equivalents 
$63.5  
$65.4 

Accounts receivable, net of allowance for doubtful accounts of $4.4 at March 30, 2024 and $3.7 at April 1, 2023 
 255.2  
 239.6 

Inventory 
 622.8  
 587.2 

Prepaid expenses and other current
    assets 
 24.0  
 21.1 

Total current assets 
 965.5  
 913.3 

Property, plant and equipment, net 
 361.0  
 375.3 

Operating lease assets, net 
 41.4  
 41.4 

Goodwill 
 1,874.9  
 1,869.8 

Intangible assets, net 
 1,391.9  
 1,452.9 

Other noncurrent assets 
 43.9  
 37.7 

Total assets 
$4,678.6  
$4,690.4 

  
    
   

LIABILITIES AND STOCKHOLDERS’ EQUITY 
    
   

Current liabilities: 
    
   

Accounts payable 
$116.2  
$146.8 

Accrued expenses and other current liabilities 
 167.3  
 153.4 

Current operating lease liabilities 
 7.0  
 7.6 

Current portion of long-term debt 
 3.8  
 1.5 

Total current liabilities 
 294.3  
 309.3 

Long-term debt, less current portion 
 1,188.1  
 1,393.5 

Noncurrent operating lease liabilities 
 35.3  
 33.9 

Deferred income taxes 
 284.2  
 295.1 

Other noncurrent liabilities 
 124.8  
 122.7 

Total liabilities 
 1,926.7  
 2,154.5 

Commitments and contingencies (Note 18) 
    
   

Stockholders’ equity: 
    
   

Preferred stock, $.01 par value; authorized shares: 10,000,000 as of March 30, 2024 and April 1, 2023, respectively; issued shares: 4,600,000 as of March 30, 2024 and April 1, 2023, respectively 
 0.0  
 0.0 

Common stock, $.01 par value; authorized shares: 60,000,000 at March 30, 2024 and April 1, 2023, respectively; issued shares: 30,227,444 and 29,989,948 at March 30, 2024 and April 1, 2023, respectively 
 0.3  
 0.3 

Additional paid-in capital 
 1,625.2  
 1,589.9 

Accumulated other comprehensive income/(loss) 
 0.7  
 (4.1)

Retained earnings 
 1,216.8  
 1,029.9 

Treasury stock, at cost, 1,015,053 shares and 966,398 shares at March 30, 2024 and April 1, 2023, respectively 
 (91.1) 
 (80.1)

Total stockholders’ equity 
 2,751.9  
 2,535.9 

Total liabilities and stockholders’
    equity 
$4,678.6  
$4,690.4 

 
See accompanying notes.
 


35
 

 
RBC Bearings Incorporated
Consolidated Statements
of Operations

(amounts in millions, except share and per
share data)

 


  
Fiscal Year Ended 

  
March
                                            30,  2024   
April
                                            1,  2023   
April
                                            2,  2022  

Net sales 
$1,560.3  
$1,469.3  
$942.9 

Cost of sales 
 889.8  
 864.5  
 585.8 

Gross margin 
 670.5  
 604.8  
 357.1 

Operating expenses: 
    
    
   

Selling, general and administrative 
 253.5  
 229.7  
 167.6 

Other, net 
 74.8  
 82.1  
 68.4 

Total operating expenses 
 328.3  
 311.8  
 236.0 

Operating income 
 342.2  
 293.0  
 121.1 

Interest expense, net 
 78.7  
 76.7  
 41.5 

Other non-operating expense 
 1.7  
 6.6  
 0.9 

Income before income taxes 
 261.8  
 209.7  
 78.7 

Provision for income taxes 
 51.9  
 43.0  
 24.0 

Net income 
$209.9  
$166.7  
$54.7 

Preferred stock dividends 
 23.0  
 22.9  
 12.0 

Net income attributable to common stockholders 
$186.9  
$143.8  
$42.7 

  
    
    
   

Net income per common share attributable to common stockholders: 
    
    
   

Basic 
$6.47  
$5.00  
$1.58 

Diluted 
$6.41  
$4.94  
$1.56 

Weighted average common shares: 
    
    
   

Basic 
 28,917,008  
 28,764,092  
 26,946,355 

Diluted 
 29,189,056  
 29,072,429  
 27,311,029 

 
See accompanying notes.
 


36
 

 
RBC Bearings Incorporated
Consolidated Statements
of Comprehensive Income

(amounts in millions)

 


  
Fiscal Year Ended 

  
March
                                            30,  2024   
April
                                            1,  2023   
April
                                            2,  2022  

Net income 
$209.9  
$166.7  
$54.7 

Pension and postretirement liability adjustments, net of taxes (1) 
 0.4  
 9.4  
 4.2 

Change in fair value of derivatives, net of taxes (2) 
 3.4  
 (2.2) 
 — 

Foreign currency translation adjustments 
 1.0  
 (5.5) 
 0.4 

Total comprehensive income 
$214.7  
$168.4  
$59.3 

 

(1)These adjustments were net of tax expense of $0.4, tax expense of $2.0 and tax expense of $1.1 in fiscal 2024, 2023 and 2022, respectively.

 

(2)These adjustments were net of tax expense of $1.0 and net of tax benefit of $0.6 in fiscal 2024 and fiscal 2023, respectively.


 
See accompanying notes.
 


37
 

 
RBC Bearings Incorporated
Consolidated Statements
of Stockholders’ Equity
(amounts in millions, except share data)
 


  
    
    
    
    
    
 Accumulated  
    
    
    
   

  
    
    
    
   
 Additional  
 Other  
    
    
    
 Total 

  
 Common
                                            Stock  
 Preferred
                                            Stock  
 Paid-in  
 Comprehensive  
 Retained  
 Treasury
                                            Stock  
 Stockholders’ 

  
 Shares  
 Amount  
 Shares  
 Amount  
 Capital  
 Income/(Loss)  
 Earnings  
 Shares  
 Amount  
 Equity 

Balance at April 3,
    2021 
 26,110,320  
$0.3  
 —  
$—  
$462.6  
$(10.4) 
$843.4  
 (884,701) 
$(63.8) 
$1,232.1 

Net income 
 —  
 —  
 —  
 —  
 —  
 —  
 54.7  
 —  
 —  
 54.7 

Stock-based compensation 
 —  
 —  
 —  
 —  
 32.9  
 —  
 —  
 —  
 —  
 32.9 

Preferred stock dividends 
 —  
 —  
 —  
 —  
 —  
 —  
 (12.0) 
 —  
 —  
 (12.0)

Repurchase of common stock 
 —  
 —  
 —  
 —  
 —  
 —  
 —  
 (43,621) 
 (8.6) 
 (8.6)

Exercise of equity awards 
 149,896  
 0.0  
 —  
 —  
 18.0  
 —  
 —  
 —  
 —  
 18.0 

Change in pension and post-retirement plan benefit adjustments, net of tax expense of $1.1 
 —  
 —  
 —  
 —  
 —  
 4.2  
 —  
 —  
 —  
 4.2 

Issuance of restricted stock, net
    of forfeitures 
 96,992  
 —  
 —  
 —  
 —  
 —  
 —  
 —  
 —  
 — 

Preferred stock issuance, net of
    issuance costs 
 —  
 —  
 4,600,000  
 0.0  
 445.3  
 —  
 —  
 —  
 —  
 445.3 

Common stock issuance, net of issuance
    costs 
 3,450,000  
 0.0  
 —  
 —  
 605.5  
 —  
 —  
 —  
 —  
 605.5 

Currency
    translation adjustments 
 —  
 —  
 —  
 —  
 —  
 0.4  
 —  
 —  
 —  
 0.4 

Balance at April 2, 2022 
 29,807,208  
$0.3  
 4,600,000  
$0.0  
$1,564.3  
$(5.8) 
$886.1  
 (928,322) 
$(72.4) 
$2,372.5 

Net income 
 —  
 —  
 —  
 —  
 —  
 —  
 166.7  
 —  
 —  
 166.7 

Stock-based compensation 
 —  
 —  
 —  
 —  
 14.0  
 —  
 —  
 —  
 —  
 14.0 

Preferred stock dividends 
 —  
 —  
 —  
 —  
 —  
 —  
 (22.9) 
 —  
 —  
 (22.9)

Repurchase of common stock 
 —  
 —  
 —  
 —  
 —  
 —  
 —  
 (38,076) 
 (7.7) 
 (7.7)

Exercise of equity awards 
 116,563  
 0.0  
 —  
 —  
 11.6  
 —  
 —  
 —  
 —  
 11.6 

Change in pension and post-retirement plan benefit adjustments, net of tax expense of $2.0 
 —  
 —  
 —  
 —  
 —  
 9.4  
 —  
 —  
 —  
 9.4 

Issuance of restricted stock, net
    of forfeitures 
 66,177  
 —  
 —  
 —  
 —  
 —  
 —  
 —  
 —  
 — 

Change in fair value of derivatives, net of tax benefit of $0.6 
 —  
 —  
 —  
 —  
 —  
 (2.2) 
 —  
 —  
 —  
 (2.2)

Currency
    translation adjustments 
 —  
 —  
 —  
 —  
 —  
 (5.5) 
 —  
 —  
 —  
 (5.5)

Balance at April 1, 2023 
 29,989,948  
$0.3  
 4,600,000  
$0.0  
$1,589.9  
$(4.1) 
$1,029.9  
 (966,398) 
$(80.1) 
$2,535.9 

Net income 
 —  
 —  
 —  
 —  
 —  
 —  
 209.9  
 —  
 —  
 209.9 

Stock-based compensation 
 —  
 —  
 —  
 —  
 14.9  
 —  
 —  
 —  
 —  
 14.9 

Preferred stock dividends 
 —  
 —  
 —  
 —  
 —  
 —  
 (23.0) 
 —  
 —  
 (23.0)

Repurchase of common stock 
 —  
 —  
 —  
 —  
 —  
 —  
 —  
 (48,655) 
 (11.0) 
 (11.0)

Exercise of equity awards 
 168,321  
 0.0  
 —  
 —  
 20.4  
 —  
 —  
 —  
 —  
 20.4 

Change in pension and post-retirement plan benefit adjustments, net of tax expense of $0.4 
 —  
 —  
 —  
 —  
 —  
 0.4  
 —  
 —  
 —  
 0.4 

Issuance of restricted stock, net
    of forfeitures 
 69,175  
 —  
 —  
 —  
 —  
 —  
 —  
 —  
 —  
 — 

Change in fair value of derivatives, net of tax expense of $1.0 
 —  
 —  
 —  
 —  
 —  
 3.4  
 —  
 —  
 —  
 3.4 

Currency
    translation adjustments 
 —  
 —  
 —  
 —  
 —  
 1.0  
 —  
 —  
 —  
 1.0 

Balance at
    March 30, 2024 
 30,227,444  
$0.3  
 4,600,000  
$0.0  
$1,625.2  
$0.7  
$1,216.8  
 (1,015,053) 
$(91.1) 
$2,751.9 

 
See accompanying notes.
 

38
 

 
RBC Bearings Incorporated
Consolidated Statements
of Cash Flows

(amounts in millions)

 


  
Fiscal Year Ended 

  
March
                                            30, 2024   
April
                                            1, 2023   
April
                                            2, 2022  

Cash flows from operating activities: 
   
   
  

Net income 
$209.9  
$166.7  
$54.7 

Adjustments to reconcile net income to net cash provided
    by operating activities: 
    
    
   

Depreciation and amortization 
 119.3  
 115.4  
 65.5 

Deferred income taxes 
 (12.3) 
 (21.4) 
 0.2 

Amortization of deferred financing costs 
 3.0  
 7.2  
 18.9 

Consolidation and restructuring and other non-cash charges 
 2.6  
 2.3  
 2.4 

Noncash operating lease expense 
 6.8  
 7.2  
 5.8 

Loss on extinguishment of debt 
 —  
 —  
 1.0 

Stock-based compensation 
 17.4  
 14.0  
 32.9 

Loss on disposition of assets 
 0.6  
 0.3  
 0.3 

Changes in operating assets and liabilities, net of
    acquisitions: 
    
    
   

Accounts receivable 
 (13.4) 
 7.8  
 (53.5)

Inventory 
 (31.6) 
 (71.7) 
 (16.2)

Prepaid expenses and other current assets 
 (2.4) 
 (5.8) 
 (1.8)

Other noncurrent assets 
 (3.0) 
 (0.8) 
 (8.2)

Accounts payable 
 (30.7) 
 (11.1) 
 52.4 

Accrued expenses and other current liabilities 
 9.0  
 6.0  
 22.1 

Other noncurrent liabilities 
 (0.5) 
 4.5  
 3.8 

Net cash provided by operating activities 
 274.7  
 220.6  
 180.3 

Cash flows from investing activities: 
    
    
   

Capital expenditures 
 (33.2) 
 (42.0) 
 (29.8)

Acquisition of businesses and related purchase price
    adjustments 
 (19.3) 
 27.5  
 (2,908.2)

Purchase of marketable securities 
 —  
 —  
 (30.0)

Proceeds from sale of marketable securities 
 —  
 —  
 120.5 

Proceeds from sale of assets 
 0.3  
 0.5  
 0.0 

Net cash used in investing activities 
 (52.2) 
 (14.0) 
 (2,847.5)

Cash flows from financing activities: 
    
    
   

Proceeds from issuance of common stock, net of issuance
    costs 
 —  
 —  
 605.5 

Proceeds from issuance of preferred stock, net of issuance
    costs 
 —  
 —  
 445.3 

Proceeds from term loans, net of financing costs 
 —  
 —  
 1,285.8 

Proceeds from senior notes, net of financing costs 
 —  
 —  
 494.2 

Proceeds from revolving credit facilities 
 20.3  
 —  
 — 

Finance fees paid in connection with credit facilities
    and senior notes 
 —  
 (0.1) 
 (19.5)

Repayments of term loans 
 (225.0) 
 (300.0) 
 (113.0)

Repayments of notes payable 
 (1.6) 
 (0.5) 
 (0.5)

Principal payments on finance lease obligations 
 (3.6) 
 (3.2) 
 (1.6)

Preferred stock dividends paid 
 (23.0) 
 (22.9) 
 (7.1)

Repurchase of common stock 
 (11.0) 
 (7.7) 
 (8.6)

Proceeds from exercise of equity awards 
 20.4  
 11.6  
 18.0 

Net cash provided by/(used in) financing activities 
 (223.5) 
 (322.8) 
 2,698.5 

  
    
    
   

Effect of exchange rate changes
    on cash 
 (0.9) 
 (1.3) 
 0.5 

Cash and cash equivalents: 
    
    
   

(Decrease)/increase during the year 
 (1.9) 
 (117.5) 
 31.8 

Cash and cash equivalents, at
    beginning of year 
 65.4  
 182.9  
 151.1 

Cash and cash equivalents, at
    end of year 
$63.5  
$65.4  
$182.9 

  
    
    
   

Supplemental disclosures of cash
    flow information: 
    
    
   

Cash paid for: 
    
    
   

Income taxes 
$56.4  
$60.4  
$17.1 

Interest 
 75.7  
 69.9  
 11.6 

 
See accompanying notes.
 


39
 

 
RBC Bearings Incorporated
Notes to Consolidated Financial Statements
(amounts in millions, except share and per
share data)

 
1. Organization and Business 
 
RBC Bearings Incorporated,
together with its subsidiaries, is an international manufacturer and marketer of highly engineered precision bearings, components and
essential systems for the industrial, defense and aerospace industries, which are integral to the manufacture and operation of most machines,
aircraft and mechanical systems, to reduce wear to moving parts, facilitate proper power transmission, reduce damage and energy loss
caused by friction and control pressure and flow. The terms “we,” “us,” “our,” “RBC”
and the “Company” mean RBC Bearings Incorporated and its subsidiaries, unless the context indicates another meaning. While
we manufacture products in all major categories, we focus primarily on highly technical or regulated bearing products and engineered
products for specialized markets that require sophisticated design, testing and manufacturing capabilities. We believe our unique expertise
has enabled us to garner leading positions in many of the product markets in which we primarily compete. Over the past 19 years, we have
broadened our end markets, products, customer base and geographic reach. We currently have 54 facilities in 11 countries, of which 38
are manufacturing facilities.
 
The Company operates in two
reportable business segments—aerospace/defense and industrial—in which it manufactures roller bearing components and assembled
parts and designs and manufactures high-precision roller and ball bearings. The Company sells to a wide variety of original equipment
manufacturers (“OEMs”) and distributors who are widely dispersed geographically. No one customer accounted for more than
17% of the Company’s net sales in fiscal 2024, 16% of net sales in fiscal 2023 and 11% of net sales in fiscal 2022. The Company’s
segments are further discussed in Note 20.
 
2. Summary of Significant Accounting
Policies
 
General
 
The consolidated financial
statements include the accounts of RBC Bearings Incorporated and its wholly-owned subsidiaries. All intercompany balances and transactions
have been eliminated in consolidation.
 
The Company has a fiscal
year consisting of 52 or 53 weeks, ending on the Saturday closest to March 31. Based on this policy, fiscal year 2024 contained
52 weeks, fiscal year 2023 contained 52 weeks and fiscal year 2022 contained 52 weeks.
 
Use of Estimates
 
The preparation of financial
statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the financial statements,
and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates
are used for, but not limited to, the accounting for the allowance for doubtful accounts, valuation of inventories, goodwill and intangible
assets, depreciation and amortization, income taxes and tax reserves, purchase price allocation for acquired assets and liabilities,
and the valuation of options.
 
Revenue Recognition
 
A contract with a customer
exists when there is commitment and approval from both parties involved, the rights of the parties are identified, payment terms are defined,
the contract has commercial substance, and collectability of consideration is probable. The Company has determined that the contract with
the customer is established when the customer purchase order is accepted or acknowledged. LTAs are used by the Company and certain of
its customers to reduce their supply uncertainty for a period of time, typically multiple years. While these LTAs define commercial terms
including pricing, termination rights and other contractual requirements, they do not represent the contract with the customer for revenue
recognition purposes.
 
When the Company accepts
or acknowledges a customer purchase order, the type of good or service is defined on a line-by-line basis. The majority of the Company’s
revenue relates to the sale of goods and contains a single performance obligation for each distinct good. The remainder of the Company’s
revenue from customers is generated from services performed. These services include repair and refurbishment work performed on customer-controlled
assets as well as design and test work. 



40
 

 
Transaction price reflects
the amount of consideration that the Company expects to be entitled to in exchange for transferred goods or services. A contract’s
transaction price is allocated to each distinct performance obligation and revenue is recognized as the performance obligation is satisfied.
The Company generally sells products and services with observable standalone selling prices.
 
The performance obligations
for the majority of RBC’s product sales are satisfied at the point in time in which the products are shipped. The Company has determined
that the customer obtains control upon shipment of the product based on the shipping terms (i.e. when it ships from RBC’s dock
or when the product arrives at the customer’s dock) and recognizes revenue when control has transferred to the customer. Once a
customer has obtained control, the customer is able to direct the use of, and obtain substantially all of the remaining benefits from,
the asset.
 
The Company has determined
performance obligations are satisfied over time for customer contracts where RBC provides services to customers and also for a limited
number of product sales. RBC has determined revenue recognition over time is appropriate for our service revenue contracts as they create
or enhance an asset that the customer controls throughout the duration of the contract. Revenue recognition over time is appropriate
for customer contracts with product sales in which the product sold has no alternative use to RBC without significant economic loss and
an enforceable right to payment exists, including a normal profit margin from the customer, in the event of contract termination. These
types of contracts comprised less than 1% of total sales for the fiscal years ended March 30, 2024, April 1, 2023 and April 2, 2022,
respectively. For both of these types of contracts, revenue is recognized over time based on the extent of progress towards completion
of the performance obligation. The Company utilizes the cost-to-cost measure of progress for over-time revenue recognition contracts
as the Company believes this measure best depicts the transfer of control to the customer, which occurs as the Company incurs costs on
contracts. Revenues, including profits, are recorded proportionally as costs are incurred. Costs to fulfill include labor, materials,
subcontractors’ costs, and other direct and indirect costs.
 
Contract costs are the incremental
costs of obtaining and fulfilling a contract (i.e., costs that would not have been incurred if the contract had not been obtained) to
provide goods and services to customers. Contract costs largely consist of design and development costs for molds, dies and other tools
that RBC will own and that will be used in producing the products under the supply arrangements. These contract costs are amortized to
expense on a systematic and rational basis over a period consistent with the transfer to the customer of the goods or services to which
the asset relates and are recorded in cost of sales. Costs incurred to obtain a contract are primarily related to sales commissions and
are expensed as incurred. These costs are included within selling, general and administrative costs on the consolidated statements of
operations.
 
In certain contracts, the
Company facilitates shipping and handling activities after control has transferred to the customer. The Company has elected to record
all shipping and handling activities as costs to fulfill a contract. In situations where the shipping and handling costs have not been
incurred at the time revenue is recognized, the estimated shipping and handling costs are accrued.
 
Government Assistance
 
Like other companies involved
in the aerospace industry that were impacted by the COVID-19 pandemic, the Company took part in the Aviation Manufacturing Jobs Protection
(“AMJP”) program. The AMJP program provided funding to eligible businesses to pay a portion of their compensation costs for
certain categories of employees for a period of time as part of a U.S. Department of Transportation program designed to maintain jobs
in the aviation industry. During the fiscal years ended March 30, 2024, April 1, 2023 and April 2, 2022, the Company recorded grant revenue
of $0.0, $3.1 and $4.4, respectively, all of which was recorded within cost of sales on the consolidated statements of operations. The
Company does not expect to receive any future grant revenue associated with the AMJP program. The Company is not currently receiving
grant revenue from any other sources and does not anticipate doing so in future periods.
 
Cash and Cash Equivalents
 
The Company considers all
highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. The Company maintains its
cash accounts with various banks and has not experienced any losses in such accounts. 



41
 

 
Accounts Receivable, Net and Concentration
of Credit Risk
 
Accounts receivable include
amounts billed and currently due from customers. The amounts due are stated at their estimated net realizable value. The Company maintains
an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. The
Company uses an expected credit loss model to estimate the credit losses expected over the life of an exposure (or pool of exposures).
The estimate of expected credit losses considers historical information, current information and reasonable and supportable forecasts,
including estimates of prepayments. Financial instruments with similar risk characteristics are grouped together when estimating expected
credit losses. The Company will write off accounts receivable after reasonable collection efforts have been made and the accounts are
deemed uncollectible.
 
The Company sells to a
large number of OEMs and distributors who service the aftermarket. The Company’s credit risk associated with accounts
receivable is minimized due to its customer base and wide geographic dispersion. The Company performs ongoing credit evaluations of
its customers’ financial condition and generally does not require collateral or charge interest on outstanding amounts. The
Company had concentrations of credit risk with no individual customer greater than 10% as of March 30, 2024 or April 1, 2023 with the
exception of Motion Industries. Approximately 16% and 15% of accounts receivable at both March 30, 2024 and April 1,
2023, respectively, were attributable to Motion Industries.
 
Inventory
 
Inventory is stated at the
lower of cost or net realizable value. Cost is determined by the first-in, first-out method. The Company accounts for inventory under
a full absorption method, and records adjustments to the value of inventory based upon past sales history and forecasted plans to sell
our inventories. The physical condition, including age and quality, of the inventories is also considered in establishing its valuation.
These adjustments are estimates, which could vary significantly, either favorably or unfavorably, from actual requirements if future
economic conditions, customer inventory levels or competitive conditions differ from our expectations.
 
Contract Assets (Unbilled Receivables)
 
Pursuant to the over-time
revenue recognition model, revenue may be recognized prior to the customer being invoiced. An unbilled receivable is recorded to reflect
revenue that is recognized when (1) the cost-to-cost method is applied and (2) such revenue exceeds the amount invoiced to the customer.
Contract assets are included within prepaid expenses and other current assets or other noncurrent assets on the consolidated balance
sheets.
 
Property, Plant and Equipment
 
Property, plant and equipment
are recorded at cost. Depreciation and amortization of property, plant and equipment, is recorded using the straight-line method over
the estimated useful lives of the respective assets. Depreciation of assets is reported within depreciation and amortization. Expenditures
for normal maintenance and repairs are charged to expense as incurred.
 
The estimated useful lives
of the Company’s property, plant and equipment are as follows:
 


Buildings and improvements
20-30 years

Machinery and equipment
3-15 years

Leasehold improvements
Shorter of the term of lease or estimated useful life

 
Leases
 
The Company determines if
an arrangement is a lease at contract inception. For leases where the Company is the lessee, it recognizes lease assets and related lease
liabilities at the lease commencement date based on the present value of lease payments over the lease term. The lease term is the noncancellable
period for which a lessee has the right to use an underlying asset, including periods covered by an option to extend the lease if the
lessee is reasonably certain to exercise that option and periods covered by an option to terminate the lease if the lessee is reasonably
certain not to exercise that option. For renewal options, the Company performs an assessment at commencement if it is reasonably likely
to exercise the option. The assessment is based on the Company’s intentions, past practices, estimates and factors that create
an economic incentive for the Company. Generally, the Company is not reasonably certain to exercise the renewal option in a lease contract,
with the exception of some of our leased manufacturing facilities. While some of the Company’s leases include options allowing
early termination of the lease, the Company historically has not terminated its lease agreements early unless there is an economic, financial
or business reason to do so; therefore, the Company does not typically consider the termination option in its lease term at commencement. 



42
 

 
The Company must classify
each lease as a finance lease or an operating lease. The Company’s finance leases are included in property, plant and equipment,
net. Amortization of these assets is included in depreciation and amortization expense. The Company’s operating leases consist
of rent commitments under various leases for office space, warehouses, land and buildings.
 
Most of the Company’s
leases do not provide an implicit interest rate. As a result, the Company uses its incremental borrowing rate based on the information
available at the commencement date in determining the present value of lease payments.
 
Subsequent to the initial
measurement, the lease liability continues to be measured at the present value of unpaid lease payments throughout the lease term. The
lease liability is remeasured if the lease is modified and the modification is not accounted for as a separate contract, there is a change
in the assessment of the lease term, the assessment of a purchase option exercise or the amount probable of being owed under a residual
value guarantee, or a contingency is resolved resulting in some or all of the variable lease payments becoming fixed payments. Subsequent
to the initial measurement, the right-of-use asset for a finance lease is equivalent to the initial measurement less accumulated amortization
and any accumulated impairment losses. Generally, amortization of finance leases is recorded to cost of sales on a straight-line basis
over the lease term. Subsequent to initial measurement, the right-of-use asset for an operating lease is equivalent to initial measurement
less accumulated amortization.
 
Goodwill and Indefinite-Lived Intangible Assets
 
Goodwill (representing the
excess of the amount paid to acquire a company over the estimated fair value of the net assets acquired) and indefinite-lived intangible
assets are not amortized but instead are tested for impairment annually, or when events or circumstances indicate that the carrying value
of such asset may not be recoverable. Separate tests are performed for goodwill and indefinite lived intangible assets. We completed
a quantitative test of impairment on the indefinite lived intangible assets with no impairment noted in fiscal year 2024. The determination
of any goodwill impairment is made at the reporting unit level. The Company determines the fair value of a reporting unit and compares
it to its carrying amount. If the carrying amount of the reporting unit exceeds its fair value, an impairment loss is recognized for
any amount by which the carrying amount exceeds the reporting unit’s fair value. The Company applies the income approach (discounted
cash flow method) in testing goodwill for impairment. The key assumptions used in the discounted cash flow method used to estimate fair
value include the discount rates, revenue growth rates and EBITDA margin which are affected by expectations about future market or economic
conditions. Discount rates, revenue growth rates and EBITDA margin are the most sensitive and susceptible to change as they require significant
management judgment. Discount rates are determined by using a weighted average cost of capital (“WACC”). The WACC considers
market and industry data as well as Company-specific risk factors for each reporting unit in determining the appropriate discount rate
to be used. The discount rate utilized for each reporting unit for our fiscal 2024 test was 10.0% and is indicative of the return an
investor would expect to receive for investing in such a business. Terminal growth rate determination follows common methodology of capturing
the present value of perpetual cash flow estimates beyond the last projected period assuming a constant WACC and long-term growth rates.
The terminal growth rate used for our fiscal 2024 test was 2.5%. The Company has determined that, to date, no impairment of goodwill
exists and fair value of the reporting units exceeded the carrying value in total by approximately 53.5%. The fair value of the reporting
units exceeds the carrying value by a minimum of 18.8% at each of the two reporting units.
 
Contract Liabilities (Deferred Revenue)
 
The Company may receive a
customer advance or deposit prior to revenue being recognized. Since the performance obligations related to such advances may not have
been satisfied, a contract liability is established. Contract liabilities are included within accrued expenses and other current liabilities
or other noncurrent liabilities on the consolidated balance sheets until the respective revenue is recognized. Advance payments are not
considered a significant financing component as the timing of the transfer of the related goods or services is at the discretion of the
customer. 



43
 

 
Income Taxes
 
The Company accounts for income
taxes using the liability method, which requires it to recognize a current tax liability or asset for current taxes payable or refundable
and a deferred tax liability or asset for the estimated future tax effects of temporary differences between the financial statement and
tax reporting bases of assets and liabilities to the extent that they are realizable. Deferred tax expense (benefit) results from the
net change in deferred tax assets and liabilities during the year. A valuation allowance is recorded to reduce deferred tax assets to
the amount that is more likely than not to be realized. The Company is exposed to certain tax contingencies in the ordinary course of
business and records those tax liabilities in accordance with the guidance for accounting for uncertain tax positions.
 Temporary differences relate primarily to the
timing of deductions for depreciation, stock-based compensation, goodwill amortization relating to the acquisition of operating divisions,
amortization of intangible assets, basis differences arising from acquisition accounting, pension and retirement benefits, and various
accrued and prepaid expenses. Deferred tax assets and liabilities are recorded at the rates expected to be in effect when the temporary
differences are expected to reverse.

 
Global Minimum Tax
 In October 2021, the OECD
announced an Inclusive Framework on Base Erosion and Profit Shifting including Pillar Two Model Rules defining the global minimum tax,
which calls for the taxation of large multinational corporations at a minimum rate of 15%. Subsequently multiple sets of administrative
guidance have been issued. Many non-US tax jurisdictions have either recently enacted legislation to adopt certain components of the Pillar
Two Model Rules beginning in 2024 with the adoption of additional components in later years or announced their plans to enact legislation
in future years. We are continuing to evaluate the impacts of enacted legislation and pending legislation to enact Pillar Two Model Rules
in the non-US tax jurisdictions in which we operate.

 
Net Income Per Share Attributable to Common
Stockholders
 
Basic net income per share
attributable to common stockholders is computed by dividing net income attributable to common stockholders by the weighted-average number
of common shares outstanding.
 Diluted net income per share
attributable to common stockholders is computed by dividing net income attributable to common stockholders by the sum of the weighted-average
number of common shares and dilutive common share equivalents then outstanding using the treasury stock method. Common share equivalents
consist of the incremental common shares issuable upon the exercise of stock options and the conversion of MCPS (i.e., our outstanding
preferred stock) to common shares.

 We exclude outstanding stock
options, stock awards and the MCPS from the calculations if the effect would be anti-dilutive. The dilutive effect of the MCPS is calculated
using the if-converted method. The if-converted method assumes that these securities were converted to shares of common stock at the beginning
of the reporting period to the extent that the effect is dilutive. If the effect is anti-dilutive, we calculate net income per share attributable
to common stockholders by adjusting net income in the numerator for the effect of the cumulative MCPS dividends for the respective period.

 
For the fiscal years ended
March 30, 2024 and April 1, 2023, the effect of assuming the conversion of the 4,600,000 shares of MCPS into shares of common stock was
anti-dilutive, and therefore excluded from the calculation of diluted earnings per share attributable to common stockholders. Accordingly,
net income was reduced by cumulative MCPS dividends, as presented in our consolidated statement of operations, for purposes of calculating
net income attributable to common stockholders.
 For the fiscal year ended
March 30, 2024, 120,954 employee stock options and 250 restricted shares were excluded from the calculation of diluted earnings per share
attributable to common stockholders. For the fiscal year ended April 1, 2023, 110,368 employee stock options and 1,185 restricted shares
were excluded from the calculation of diluted earnings per share attributable to common stockholders. At April 2, 2022, 179,289 employee
stock options and 325 restricted shares were excluded from the calculation of diluted earnings per share attributable to common stockholders.
The inclusion of these employee stock options and restricted shares would have been anti-dilutive.

 

44
 

 
The table below reflects the
calculation of weighted-average shares outstanding for each period presented as well as the computation of basic and diluted net income
per share attributable to common stockholders.
 


  
Fiscal Year Ended 

  
March 30, 2024   
April 1, 2023   
April 2, 2022  

Net income 
$209.9  
$166.7  
$54.7 

Preferred stock dividends 
 23.0  
 22.9  
 12.0 

Net income attributable to common stockholders 
$186.9  
$143.8  
$42.7 

  
    
    
   

Denominator: 
   
   
  

Denominator for basic net income per share attributable to common stockholders — weighted-average shares outstanding 
 28,917,008  
 28,764,092  
 26,946,355 

Effect of dilution due to employee stock awards 
 272,048  
 308,337  
 364,674 

Denominator for diluted net income per share attributable to common stockholders — weighted-average shares outstanding 
 29,189,056  
 29,072,429  
 27,311,029 

Basic net income per share attributable to common stockholders 
$6.47  
$5.00  
$1.58 

Diluted net income per share attributable to common stockholders 
$6.41  
$4.94  
$1.56 

 
Impairment of Long-Lived Assets
 The Company assesses the net realizable value
of its long-lived assets and evaluates such assets for impairment whenever indicators of impairment are present. For amortizable long-lived
assets to be held and used, if indicators of impairment are present, management determines whether the sum of the estimated undiscounted
future cash flows is less than the carrying amount. The amount of asset impairment, if any, is based on the excess of the carrying amount
over its fair value, which is estimated based on projected discounted future operating cash flows using a discount rate reflecting the
Company’s average cost of funds. During fiscal year 2024, impairment charges related to machinery and equipment and certain patents and
trademarks totaling $2.5 were recorded based on our internal assessments performed.

 
Long-lived assets to be disposed
of by sale or other means are reported at the lower of carrying amount or fair value, less costs to sell.
 
Foreign Currency Translation and Transactions
 
Assets and liabilities of
the Company’s foreign operations are translated into U.S. dollars using the exchange rate in effect at the balance sheet date. Results
of operations are translated using the average exchange rate prevailing throughout the period. The effects of exchange rate fluctuations
on translating foreign currency assets and liabilities from their functional currencies to the reporting currency are included in accumulated
other comprehensive income (loss), while gains and losses resulting from foreign currency transactions are included in other non-operating
expense (income).
 
Research and Development 
 Costs are incurred in connection with efforts
aimed at discovering and implementing new knowledge that is critical to developing new products, processes or services, significantly
improving existing products or services, and developing new applications for existing products and services. Research and development
costs for the creation of new and improved products, processes and services were approximately $33.0, $31.8 and $27.6, for fiscal years
2024, 2023 and 2022, respectively.

 
Fair Value Measurements
 
Fair value is the price that
would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date (exit price). Inputs used to measure fair value are within a hierarchy consisting of three levels. Level 1 inputs represent unadjusted
quoted prices in active markets for identical assets or liabilities. Level 2 inputs represent unadjusted quoted prices in active markets
for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not
active, or inputs other than quoted prices that are observable for the asset or liability. Level 3 inputs represent unobservable inputs
for the asset or liability. Financial assets and liabilities are classified in their entirety based on the lowest level of input that
is significant to the fair value measurement. 



45
 

 The carrying amounts reported in the balance sheet
for cash and cash equivalents, accounts receivable, accounts payable and accruals, and other current liabilities approximate their fair
value due to their short-term nature.

 The carrying amounts of the Company’s borrowings
under the Facilities approximate fair value, as these obligations have interest rates which vary in conjunction with current market conditions
and have been classified as Level 2 in the valuation hierarchy. The Senior Notes are reported at carrying value on the consolidated balance
sheets. The fair value of the Senior Notes as of March 30, 2024 was $456.8 and was computed based on quoted market prices (observable
inputs) and classified as Level 1 of the fair value hierarchy. The fair value of the interest rate swap was $1.6 at March 30, 2024, measured
using Level 2 inputs. This amount is included in other noncurrent liabilities on the Company consolidated balance sheets. The fair value
of the interest rate swap remaining in accumulated other comprehensive income, net of taxes, was $1.2 as of March 30, 2024.

 
Accumulated Other Comprehensive Income (Loss)

 
The components of comprehensive
income (loss) that relate to the Company are net income, foreign currency translation adjustments and pension plan and postretirement
benefits, all of which are presented in the consolidated statements of stockholders’ equity and comprehensive income (loss).
 
The following summarizes the
activity within each component of accumulated other comprehensive income (loss), net of taxes:
  


  
Currency Translation  
Change in Fair Value of Derivatives  
Pension and Postretirement Liability   
Total 

Balance at April 1, 2023 
$(4.6) 
$(2.2) 
$2.7  
$(4.1)

Reclassification to net income 
 —  
 4.2  
 —  
 4.2 

Net loss on foreign currency translation 
 1.0  
 —  
 —  
 1.0 

Amortization of net gain, net of tax expense of $0.4 
 —  
 —  
           0.4  
 0.4 

Gain on derivative instrument, net of tax expense of $0.9 
 —  
 (0.8) 
 —  
 (0.8)

Net current period other comprehensive income 
 1.0  
 3.4  
 0.4  
 4.8 

Balance at March 30, 2024 
$(3.6) 
$1.2  
$3.1  
$0.7 

 
Stock-Based Compensation
 The Company recognizes stock-based compensation
cost relating to all stock-based payment transactions in the financial statements based upon the grant-date fair value of the instruments
issued over the requisite service period. The fair value of each option grant was estimated on the date of grant using the Black-Scholes
pricing model. The Company estimates expected forfeitures at the grant date and recognizes stock-based compensation costs, accordingly.
The Company also recognizes stock-based compensation cost relating to restricted stock awards that are earned by employees prior to being
granted as liability awards.

 
Recent Accounting Pronouncements
 
In November 2023, Financial
Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280): Improvements to
Reportable Segment Disclosures. The amendments in ASU 2023-07 improve the disclosures about a public entity’s reportable segments
and address requests from investors for additional, more detailed information about a reportable segment’s expenses. Following the
release of ASU 2023-07 in November 2023, the effective date will be annual reporting periods beginning after December 15, 2024. As of
March 30, 2024, the Company is evaluating the impact on its consolidated financial statements. 



46
 

 
In December 2023, the FASB
issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in ASU 2023-09 address investor requests
for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation
and income taxes paid information. Following the release of ASU 2023-09 in December 2023, the effective date will be annual reporting
periods beginning after December 15, 2024. As of March 30, 2024, the Company is evaluating the impact on its consolidated financial statements.
 
Other new pronouncements issued
but not effective until after March 30, 2024 are not expected to have a material impact on our financial position, results of operations
or liquidity.
 
3. Revenue
from Contracts with Customers
 
Disaggregation of Revenue
 
The following table disaggregates
total revenue by end market which is how we view our reportable segments (see Note 20):
 


  
Fiscal Year Ended 

  
March 30,  2024   
April 1,  2023   
April 2,  2022  

Aerospace/Defense 
$519.4  
$430.3  
$381.5 

Industrial 
 1,040.9  
 1,039.0  
 561.4 

  
$1,560.3  
$1,469.3  
$942.9 

 
The following table disaggregates
total revenue by geographic origin:
 


 
 
Fiscal Year Ended
 

 
 
March 30,
  2024
 
 
April 1,  
2023
 
 
April 2, 
 2022
 

United States
 
$
1,375.4
 
 
$
1,292.9
 
 
$
833.4
 

International
 
 
184.9
 
 
 
176.4
 
 
 
109.5
 

 
 
$
1,560.3
 
 
$
1,469.3
 
 
$
942.9
 

 
The following table illustrates
the approximate percentage of revenue recognized for performance obligations satisfied over time versus the amount of revenue recognized
for performance obligations satisfied at a point in time:
 


  
Fiscal Year Ended 

  
March 30,  2024   
April 1,  2023   
April 2,  2022  

Point-in-time	 
 98% 
 98% 
 97%

Over time	 
 2% 
 2% 
 3%

  
 100% 
 100% 
 100%

 
Remaining Performance Obligations
 
Remaining performance obligations
represent the transaction price of orders meeting the definition of a contract in the new revenue standard for which work has not been
performed or has been partially performed and excludes unexercised contract options. The duration of the majority of our contracts, as
defined by ASC Topic 606, is less than one year. The Company has elected to apply the practical expedient, which allows companies to exclude
remaining performance obligations with an original expected duration of one year or less. The aggregate amount of the transaction price
allocated to remaining performance obligations for such contracts with a duration of more than one year was approximately $464.4 at March
30, 2024. The Company expects to recognize revenue on approximately 62% and 92% of the remaining performance obligations over the next
12 and 24 months, respectively, with the remainder recognized thereafter.
 
Contract Balances
 
The timing of revenue recognition,
invoicing and cash collections affect accounts receivable, unbilled receivables (contract assets) and customer advances and deposits (contract
liabilities) on the consolidated balance sheets. These assets and liabilities are reported on the consolidated balance sheets on an individual
contract basis at the end of each reporting period. 



47
 

 
Contract Assets (Unbilled
Receivables) - Pursuant to the over-time revenue recognition model, revenue may be recognized prior to the customer being invoiced.
An unbilled receivable is recorded to reflect revenue that is recognized when (1) the cost-to-cost method is applied and (2) such revenue
exceeds the amount invoiced to the customer.
 
As of March 30, 2024 and April
1, 2023, current contract assets were $6.9 and $4.5, respectively, and included within prepaid expenses and other current assets on the
consolidated balance sheets. The increase in contract assets was primarily due to the recognition of revenue related to the satisfaction
or partial satisfaction of performance obligations prior to billing partially offset by amounts billed to customers during the period.
As of March 30, 2024 and April 1, 2023, the Company did not have any contract assets classified as noncurrent on the consolidated balance
sheets.
 
Contract Liabilities (Deferred
Revenue) - The Company may receive a customer advance or deposit, or have an unconditional right to receive a customer advance, prior
to revenue being recognized. Since the performance obligations related to such advances may not have been satisfied, a contract liability
is established. Advance payments are not considered a significant financing component as the timing of the transfer of the related goods
or services is at the discretion of the customer.
 
As of March 30, 2024 and April
1, 2023, current contract liabilities were $22.5 and $20.6, respectively, and included within accrued expenses and other current liabilities
on the consolidated balance sheets. The increase in current contract liabilities was primarily due to advance payments received and the
reclassification of a portion of advance payments received from the noncurrent portion of contract liabilities partially offset by revenue
recognized on customer contracts. For the year ended March 30, 2024, the Company recognized revenues of $16.4 that were included in the
contract liability balance as of April 1, 2023. For the year ended April 1, 2023, the Company recognized revenues of $13.1 that were included
in the contract liability balance at April 2, 2022.
 
As of March 30, 2024 and April
1, 2023, noncurrent contract liabilities were $19.9 and $19.8, respectively, and included within other noncurrent liabilities on the consolidated
balance sheets. The increase in noncurrent contract liabilities was primarily due to advance payments received partially offset by the
reclassification of a portion of advance payments received to the current portion of contract liabilities.
 
Variable Consideration
 
The amount of consideration
to which the Company expects to be entitled in exchange for the goods and services is not generally subject to significant variations.
However, the Company does offer certain customers rebates, prompt payment discounts, end-user discounts, the right to return eligible
products, and/or other forms of variable consideration. The Company estimates this variable consideration using the expected value amount,
which is based on historical experience. The Company includes estimated amounts in the transaction price to the extent it is probable
that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration
is resolved. The Company adjusts the estimate of revenue at the earlier of when the amount of consideration the Company expects to receive
changes or when the consideration becomes fixed. Accrued customer rebates were $38.0 and $39.6 at March 30, 2024 and April 1, 2023, respectively,
and are included within accrued expenses and other current liabilities on the consolidated balance sheets.
 
4.  Fair
Value
 
Fair value is defined as the
price that would be expected to be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date (exit price). The FASB provides accounting rules that classify the inputs used to measure fair value
into the following hierarchy:
 
Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities.
 
Level 2 – Unadjusted quoted prices in active
markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that
are not active, or inputs other than quoted prices that are observable for the asset or liability.
 
Level 3 – Unobservable inputs for the asset
or liability.
 
Financial assets and liabilities
are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. 



48
 

 
As a result of the occurrence
of triggering events such as purchase accounting for acquisitions, the Company measures certain assets and liabilities based on Level
3 inputs.
 
Recurring Fair Value Measurements
 The
Company’s financial instruments consist primarily of cash and cash equivalents, accounts receivable, trade accounts payable, short-term
borrowings, long-term debt, and a derivative in the form of an interest rate swap. Due to their short-term nature, the carrying value
of cash and cash equivalents, accounts receivable, trade accounts payable, accrued expenses and short-term borrowings are a reasonable
estimate of their fair value. Long-term assets held on our balance sheets related to benefit plan obligations are measured at fair value.
The fair value of the Company’s long-term fixed-rate debt, based on quoted market prices, was $456.8 and $450.0 at March 30, 2024
and April 1, 2023, respectively. The carrying value of this debt was $494.2 at March 30, 2024 and $493.3 at April 1, 2023. The fair value
of long-term fixed-rate debt was measured using Level 1 inputs. Due to the nature of fair value calculations for variable-rate debt,
the carrying value of the Company’s long-term variable-rate debt is a reasonable estimate of its fair value. The fair value of the interest
rate swap was $1.6 and $2.8 at March 30, 2024 and April 1, 2023, respectively, and was measured using Level 2 inputs. This amount is
included in other noncurrent liabilities on the Company’s consolidated balance sheets. The interest rate swap, net of taxes, had
accumulated other comprehensive income of $1.2 and accumulated other comprehensive loss of $2.2 as of March 30, 2024 and April 1, 2023
and was included in accumulated other comprehensive income/(loss) on the Company’s consolidated balance sheets, and in the Company’s
consolidated statements of comprehensive income. 
The Company does not believe
it has significant concentrations of risk associated with the counterparties to its financial instruments.
 
5. Allowance
for Doubtful Accounts
 
The activity in the allowance
for doubtful accounts consists of the following:
 


Fiscal Year Ended 
Balance at Beginning of Year  
Additions  
Other*  
Write-offs  
Balance at End of Year 

March 30, 2024 
$           3.7  
$           0.2  
$          0.5  
$              —  
$          4.4 

April 1, 2023 
$2.7  
$0.8  
$0.4  
$(0.2) 
$3.7 

April 2, 2022 
$1.8  
$1.4  
$(0.1) 
$(0.4) 
$2.7 

 

*Foreign currency, price discrepancies, customer returns, disposition
and acquisition transactions.

 
6. Inventory
 
Inventories are
summarized below:
 


  
March 30, 2024   
April 1, 2023  

Raw materials 
$138.1  
$132.4 

Work in process 
 137.9  
 132.5 

Finished goods 
 346.8  
 322.3 

  
$622.8  
$587.2 

 
7. Property,
Plant and Equipment
 
Property, plant and equipment
consist of the following:
 


  
March 30, 2024   
April 1, 2023  

Land 
$25.2  
$25.2 

Buildings and improvements 
 175.0  
 174.3 

Machinery and equipment 
 497.8  
 472.8 

  
 698.0  
 672.3 

Less: accumulated depreciation 
 (337.0) 
 (297.0)

  
$361.0  
$375.3 

 Depreciation expense was $48.9, $46.2 and $30.8
for the fiscal years ended March 30, 2024, April 1, 2023, and April 2, 2022, respectively.

 


49
 

 
Finance Leases
 For the year ended March 30, 2024, $51.8 of assets
included in buildings and improvements and $7.9 of assets included in machinery and equipment were accounted for as finance leases. For
the year ended April 1, 2023, $51.5 of assets included in buildings and improvements and $6.5 of assets included in machinery and equipment
were accounted for as finance leases. At March 30, 2024 and April 1, 2023, the Company had accumulated amortization of $10.3 and $5.8
associated with these assets, respectively. Amortization expense associated with these finance leases was $4.9, $4.5 and $1.3 for the
years ended March 30, 2024, April 1, 2023 and April 2, 2022, respectively, and is included within depreciation expense as mentioned above.

 
8. Leases
 The Company enters into leases for manufacturing
facilities, warehouses, sales offices, information technology equipment, plant equipment, vehicles and certain other equipment with varying
end dates from April 2024 to March 2043, including renewal options.

 
The following table represents
the impact of leasing on the consolidated balance sheets:
  
     Balance Sheet Classification    March 30, 2024      April 1, 2023    Assets:                  Operating lease assets, net   Operating lease assets, net   $ 41.4     $ 41.4    Finance lease right of use assets, net   Property, plant and equipment, net     49.4       52.2    Total leased assets, net       $ 90.8     $ 93.6                           Liabilities:                      Current operating lease liabilities   Current operating lease liabilities   $ 7.0     $ 7.6    Current finance lease liabilities   Accrued expenses and other current liabilities     5.7       5.2    Noncurrent operating lease liabilities   Noncurrent operating lease liabilities     35.3       33.9    Noncurrent finance lease liabilities   Other noncurrent liabilities     46.7       48.5    Total lease liabilities       $ 94.7     $ 95.2   
 Cash paid associated with operating lease liabilities
was $8.1 and $8.5 for the fiscal years ended March 30, 2024 and April 1, 2023, respectively, all of which were included within the operating
cash flow section of the consolidated statements of cash flows. Lease assets obtained in exchange for new operating lease liabilities
were $1.7 and $2.0 for the fiscal years ended March 30, 2024 and April 1, 2023, respectively. Lease modifications which resulted in newly
obtained lease assets in exchange for new operating lease liabilities were $5.4 and $3.1 for the fiscal years ended March 30, 2024 and
April 1, 2023, respectively.

 Cash paid associated with finance lease liabilities
was $5.3 and $5.0 for the fiscal years ended March 30, 2024 and April 1, 2023, respectively. Of these amounts, $3.6 and $3.2 were included
within the financing cash flow section of the consolidated statements of cash flows for the fiscal years ended March 30, 2024 and April
1, 2023, respectively. $1.8 and $1.8 of these cash payments were included within the operating cash flow section of the consolidated statements
of cash flows for the fiscal years ended March 30, 2024 and April 1, 2023, respectively. Lease assets obtained in exchange for new finance
lease liabilities were $2.3 and $4.0 for the fiscal years ended March 30, 2024 and April 1, 2023, respectively. Lease modifications which
resulted in reductions of lease assets in exchange for reductions of finance lease liabilities were $0.0 and $0.1 for the fiscal years
ended March 30, 2024 and April 1, 2023, respectively.

 
Total operating lease expense
was $10.1, $9.9 and $8.3 for the fiscal years ended March 30, 2024, April 1, 2023 and April 2, 2022, respectively. Short-term and variable
lease expense were immaterial. 



50
 

 
Total finance lease expense
was $6.7 for the fiscal year ended March 30, 2024, of which, $5.0 was related to amortization expense of finance lease assets and $1.7
was related to interest expense. Total finance lease expense was $6.4 for the fiscal year ended April 1, 2023, of which, $4.5 was related
to amortization expense of finance lease assets and $1.9 was related to interest expense. Variable lease expense was immaterial.
 
Future undiscounted lease
payments for the remaining lease terms as of March 30, 2024, including renewal options reasonably certain of being exercised, are as follows:
 


  
Operating Leases  
Finance Leases 

Within one year 
$7.1  
$5.8 

One to two years 
 6.5  
 5.7 

Two to three years 
 6.5  
 5.1 

Three to four years 
 4.7  
 4.4 

Four to five years 
 3.4  
 3.9 

Thereafter 
 25.1  
 41.6 

Total future undiscounted lease payments 
 53.3  
 66.5 

Less: imputed interest 
 (11.0) 
 (14.1)

Total lease liabilities 
$42.3  
$52.4 

 
The weighted-average remaining
lease term on March 30, 2024 for our operating leases is 10.2 years. The weighted-average discount rate on March 30, 2024 for our operating
leases is 5.7%.
 
The weighted-average remaining
lease term on March 30, 2024 for our finance leases is 14.3 years. The weighted-average discount rate on March 30, 2024 for our finance
leases is 3.5%.
 
9. Specline
Acquisition
 On August 18, 2023, RBC acquired the business
assets of Specline, Inc. (“Specline”) for $18.7. The Company accounted for the transaction as a business combination for accounting
purposes. Specline, which is based in Carson City, Nevada, is a manufacturer of precision bearings for the commercial and defense aerospace
markets. The preliminary purchase price allocation is as follows: $1.4 of accounts receivable, $4.0 of inventory, $1.5 of fixed assets,
$0.8 of operating lease assets, $8.8 of intangible assets, $2.1 of earnout liability, and $0.8 of operating lease liabilities. Goodwill
of $5.1 resulting from the purchase price allocation is not deductible for tax purposes and is subject to change pending a final valuation
of the assets and liabilities. Specline is included in the Aerospace/Defense segment.

 


51
 

 
10. Goodwill
and Intangible Assets
 
Goodwill
 
Goodwill balances, by segment,
consist of the following:
 


  
Aerospace/
Defense  
Industrial  
Total 

April 2, 2022 
$194.1  
$1,708.0  
$1,902.1 

Acquisition (1) 
 —  
 (28.7) 
 (28.7)

Translation adjustments 
 —  
 (3.6) 
 (3.6)

April 1, 2023 
$194.1  
$1,675.7  
$1,869.8 

Acquisition (2) 
 5.1  
 —  
 5.1 

Translation adjustments 
 —  
 (0.0) 
 (0.0)

March 30, 2024 
$199.2  
$1,675.7  
$1,874.9 

 
  (1) Purchase price adjustments associated with the acquisition of Dodge Industrial. 

(2)Goodwill associated with the acquisition of Specline, Inc. discussed further in Note 9.

 
Intangible Assets
 
The table below summarizes
the net book value and weighted average useful lives of our intangible assets.
 


 
 
Weighted
 
 
March 30, 2024
 
 
April 1, 2023
 

 
 
Average Useful Lives (Years)
 
 
Gross Carrying Amount
 
 

 Accumulated Amortization
 
 
Gross Carrying Amount
 
 

 
Accumulated Amortization
 

Product approvals
 
 
24
 
 
$
50.7
 
 
$
20.3
 
 
$
50.7
 
 
$
18.4
 

Customer relationships and lists
 
 
24
 
 
 
1,300.7
 
 
 
160.7
 
 
 
1,293.7
 
 
 
106.5
 

Trade names
 
 
25
 
 
 
217.2
 
 
 
32.5
 
 
 
215.4
 
 
 
23.3
 

Patents and trademarks
 
 
15
 
 
 
10.8
 
 
 
6.5
 
 
 
13.4
 
 
 
7.2
 

Domain names
 
 
10
 
 
 
0.4
 
 
 
0.4
 
 
 
0.4
 
 
 
0.4
 

Internal-use software
 
 
3
 
 
 
16.7
 
 
 
8.8
 
 
 
15.2
 
 
 
4.4
 

Other
 
 
5
 
 
 
1.6
 
 
 
1.3
 
 
 
1.1
 
 
 
1.1
 

 
 
 
 
 
 
 
1,598.1
 
 
 
230.5
 
 
 
1,589.9
 
 
 
161.3
 

Non-amortizable repair station certifications 
 
 
n/a
 
 
 
24.3
 
 
 
—
 
 
 
24.3
 
 
 
—
 

Total
 
 
24
 
 
$
1,622.4
 
 
$
230.5
 
 
$
1,614.2
 
 
$
161.3
 

 
Amortization expense for
definite-lived intangible assets during fiscal years 2024, 2023 and 2022 was $70.4, $69.1 and $34.7, respectively. Estimated amortization
expense for the five succeeding fiscal years and thereafter is as follows:
 


2025 
$70.7 

2026 
 67.8 

2027 
         66.1 

2028 
 65.3 

2029 
 63.9 

2030 and thereafter 
 1,033.8 

 
11. Accrued
Expenses and Other Current Liabilities
 
The significant components
of accrued expenses and other current liabilities are as follows:
 


   
March 30, 2024   
April 1, 2023  

Employee compensation and related benefits 
$35.7  
$34.7 

Taxes  
 23.1  
 17.5 

Contract liabilities  
 22.5  
 20.6 

Accrued rebates  
 38.0  
 39.6 

Workers compensation and insurance  
 0.4  
 0.8 

Acquisition costs 
 0.1  
 0.6 

Current finance lease liabilities 
 5.7  
 5.2 

Accrued preferred stock dividends 
 4.8  
 4.9 

Interest 
 10.4  
 10.6 

Audit fees 
 0.3  
 0.3 

Legal 
 1.3  
 1.6 

Returns and warranties 
 9.2  
 7.5 

Travel and expense costs 
 4.4  
 1.1 

Other 
 11.4  
 8.4 

  
$167.3  
$153.4 



52
 

 
12. Debt
 
Domestic Credit Facility
 The Credit Agreement, which was entered into in
fiscal 2022, provides the Company with (a) the $1,300.0 Term Loan, which was used to fund a portion of the purchase price for the acquisition
of Dodge and to pay related fees and expenses, and (b) the $500.0 Revolving Credit Facility. Debt issuance costs associated with the Credit
Agreement totaled $14.9 and are being amortized over the life of the Credit Agreement.

 
Initially, amounts outstanding under the Facilities
generally bore interest at either, at the Company’s option, (a) a base rate determined by reference to the higher of (i) Wells Fargo’s
prime lending rate, (ii) the federal funds effective rate plus 1/2 of 1.00% and (iii) the one-month LIBOR rate plus 1.00% or (b) the LIBOR
rate plus a specified margin, depending on the type of borrowing being made. The applicable margin was based on the Company’s consolidated
ratio of total net debt to consolidated EBITDA (as defined within the Credit Agreement) from time to time. In December 2022, the Credit
Agreement was amended to replace LIBOR with the secured overnight financing rate administered by the Federal Reserve Bank of New York
(i.e., SOFR) so that borrowings under the Facilities denominated in U.S. dollars bear interest at a rate per annum equal to Term
SOFR (as defined in the Credit Agreement) plus a credit spread adjustment of 0.10% plus a margin ranging from 0.75% to 2.00% depending
on the Company’s consolidated ratio of total net debt to consolidated EBITDA. The Facilities are subject to a SOFR floor of 0.00%.
As of March 30, 2024, the Company’s margin was 1.25% for SOFR loans, the commitment fee rate was 0.20%, and the letter of credit
fee rate was 1.25%. A portion of the Term Loan is subject to a fixed-rate interest swap as discussed in Note 13.
 
The Term Loan matures in November
2026 and amortizes in quarterly installments with the balance payable on the maturity date. The Company can elect to prepay some or all
of the outstanding balance from time to time without penalty, which will offset future quarterly amortization installments. Due to prepayments
previously made, the required future principal payments on the Term Loan are $0 for fiscal 2025, $0 for fiscal 2026, and $675.0 for fiscal
2027. The Revolving Credit Facility expires in November 2026, at which time all amounts outstanding under the Revolving Credit Facility
will be payable.
 
The Credit Agreement requires
the Company to comply with various covenants, including the following financial covenants: (a) a maximum Total Net Leverage Ratio (as
defined within the Credit Agreement) of 5.00:1.00, which maximum Total Net Leverage Ratio shall decrease during certain subsequent test
periods as set forth in the Credit Agreement (provided that, no more than once during the term of the Facilities, such maximum ratio applicable
at such time may be increased by the Company by 0.50:1.00 for a period of twelve (12) months after the consummation of a material acquisition);
and (b) a minimum Interest Coverage Ratio of 2.00:1.00. As of March 30, 2024 the Company was in compliance with all debt covenants.
 
The Credit Agreement allows
the Company to, among other things, make distributions to stockholders, repurchase its stock, incur other debt or liens, or acquire or
dispose of assets provided that the Company complies with certain requirements and limitations of the Credit Agreement.
 
The Company’s domestic
subsidiaries have guaranteed the Company’s obligations under the Credit Agreement, and the Company’s obligations and the domestic
subsidiaries’ guaranty are secured by a pledge of substantially all of the assets of the Company and its domestic subsidiaries.
 
As of March 30, 2024,
$675.0 was outstanding under the Term Loan, $3.7 of the Revolving Credit Facility was being utilized to provide letters of credit to
secure the Company’s obligations relating to certain insurance programs, and $18.0 of the Revolving Credit Facility had been
used to fund the purchase of the business assets of Specline, Inc. which is discussed in Note 9. The Company had the ability to
borrow up to an additional $478.3 under the Revolving Credit Facility as of March 30, 2024. 



53
 

 
Senior Notes
 In fiscal 2022, RBCA issued $500.0 aggregate principal
amount of Senior Notes. The net proceeds from the issuance of the Senior Notes were approximately $492.0, after deducting initial purchasers’
discounts and commissions and offering expenses, and were used to fund a portion of the cash purchase price for the acquisition of Dodge.

 The Senior Notes were issued pursuant to the Indenture
with Wilmington Trust, National Association, as trustee. The Indenture contains covenants limiting the ability of the Company to (i) incur
additional indebtedness or guarantee indebtedness, (ii) declare or pay dividends, redeem stock or make other distributions to stockholders,
(iii) make investments, (iv) create liens or use assets as security in other transactions, (v) merge or consolidate, or sell, transfer,
lease or dispose of substantially all of its assets, (vi) enter into transactions with affiliates, and (vii) sell or transfer certain
assets. These covenants contain various exceptions, limitations and qualifications. At any time that the Senior Notes are rated investment
grade, certain of these covenants will be suspended.
 
The Senior Notes are guaranteed
jointly and severally on a senior unsecured basis by RBC Bearings and certain of RBCA’s existing and future wholly-owned domestic
subsidiaries that also guarantee the Credit Agreement.
 
Interest on the Senior Notes
accrues at a rate of 4.375% and is payable semi–annually in cash in arrears on April 15 and October 15 of each year.
 
The Senior Notes will mature
on October 15, 2029. The Company may redeem some or all of the Senior Notes at any time on or after October 15, 2024 at the redemption
prices set forth in the Indenture, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. The Company may also
redeem up to 40% of the Senior Notes using the proceeds of certain equity offerings completed before October 15, 2024, at a redemption
price equal to 104.375% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.
In addition, at any time prior to October 15, 2024, the Company may redeem some or all of the Senior Notes at a price equal to 100% of
the principal amount, plus a “make–whole” premium, plus accrued and unpaid interest, if any, to, but excluding, the
redemption date. If the Company sells certain of its assets or experiences specific kinds of changes in control, the Company must offer
to purchase the Senior Notes.
 
Foreign Borrowing Arrangements
 
The Foreign Credit Line provides
Schaublin SA with a CHF 5.0 (approximately $5.8 USD) credit line with Credit Suisse (Switzerland) Ltd. to provide future working capital,
if necessary. As of March 30, 2024, $2.2 had been borrowed from the Foreign Credit Line and $0.1 was being utilized to provide a bank
guarantee. Fees associated with the Foreign Credit Line are nominal.
 The balances payable under all borrowing facilities
are as follows:
 


  
March 30, 2024   
April 1, 2023  

Revolver and term loan facilities 
$695.2  
$900.0 

Senior notes 
 500.0  
 500.0 

Debt issuance cost 
 (10.7) 
 (13.7)

Other 
 7.4  
 8.7 

Total debt 
 1,191.9  
 1,395.0 

Less: current portion 
 3.8  
 1.5 

Long-term debt 
$1,188.1  
$1,393.5 

 
13. Derivative Financial Instruments
 
The Company is exposed to
certain risks relating to its ongoing business operations, including market risks relating to fluctuations in interest rates. Derivative
financial instruments are recognized on the consolidated balance sheets as either assets or liabilities and are measured at fair value.
Changes in the fair values of derivatives are recorded each period in earnings or accumulated other comprehensive income, depending on
whether a derivative is effective as part of a hedged transaction. Gains and losses on derivative instruments reported in accumulated
other comprehensive income (loss) are subsequently included in earnings in the periods in which earnings are affected by the hedged item.
The Company does not use derivative instruments for speculative purposes. 



54
 

 In fiscal 2023, the Company
entered into the three-year USD-denominated Swap with a third-party financial counterparty under the Credit Agreement (see Note 12). The
Swap was executed to protect the Company from interest rate volatility on our variable-rate Term Loan Facility. The Swap became effective
December 30, 2022 and is comprised of a $600.0 notional with a maturity of three years. The notional is $400.0 as of March 30, 2024. We
receive a variable rate based on one-month Term SOFR and pay a fixed rate of 4.455%. As of March 30, 2024, after given effect to the Swap,
approximately 75% of our debt bore interest at a fixed rate after giving effect to the interest rate swap agreement in place. The notional
on the Swap will amortize as follows:

 
Year 1: $600.0
Year 2: $400.0
Year 3: $100.0
 
The Swap has been designated
as a cash flow hedge of the variability of the first unhedged interest payments (the hedged transactions) paid over the hedging relationship’s
specified time period of three years attributable to the borrowing’s contractually specified interest index on the hedged principal
of its general borrowing program or replacement or refinancing thereof. The fair value of the Swap has been disclosed in Note 4. The accumulated
other comprehensive income derivative component balance, net of taxes, was a $1.2 gain and a $2.2 loss at March 30, 2024 and April 1,
2023, respectively. The gain/loss reclassified from accumulated other comprehensive income into earnings will be recorded as interest
income/expense on the Swap and will be included in the operating section of the Company’s consolidated statements of cash flows.
 
14. Other
Noncurrent Liabilities
 
The significant components
of other noncurrent liabilities consist of:
 


  
March 30,  2024   
April 1,  2023  

Other postretirement benefits 
$10.7  
$10.0 

Noncurrent income tax liability 
 14.1  
 14.6 

Deferred compensation 
 29.9  
 25.7 

Contract liabilities 
 19.9  
 19.8 

Noncurrent finance lease liabilities 
 46.7  
 48.5 

Other 
 3.5  
 4.1 

  
$124.8  
$122.7 

 
15. Employee Benefit Plans
 
Noncontributory Defined Benefit Pension Plan
 At March 30, 2024, the Company had one consolidated
noncontributory defined benefit pension plan (the “Plan”) covering current and former union employees in its Heim division
plant in Fairfield, Connecticut, its Precision Products subsidiary plant in Plymouth, Indiana and former union employees of the Tyson
subsidiary in Glasgow, Kentucky and the Nice subsidiary in Kulpsville, Pennsylvania.

 
Plan assets are comprised primarily
of equity and fixed income investments. As of March 30, 2024 and April 1, 2023, Plan assets were $9.1 and $8.7, respectively.
 
The fair value of the above
investments was determined using quoted market prices of identical instruments. Therefore, the valuation inputs within the fair value
hierarchy established by ASC 820 were classified as Level 1 of the valuation hierarchy.
 
Benefits under the Plan are
not a function of employees’ salaries; thus, the accumulated benefit obligation equals the projected benefit obligation. At March 30,
2024 and April 1, 2023, the projected benefit obligation was $3.7 and $3.8, respectively.
 
The discount rates used in
determining the funded status of the Plan as of March 30, 2024 and April 1, 2023 were 5.00% and 4.70%, respectively.
 
The funded status of the Plan
and the amount recognized in the balance sheet at March 30, 2024 and April 1, 2023 were $5.4 and $4.9, respectively. These overfunded
amounts are included within noncurrent assets on the consolidated balance sheets. 



55
 

 
Net periodic benefit cost of
the Plan for fiscal years 2024, 2023 and 2022 was $0.1, $0.2 and $0.0, respectively. The discount rate used to determine net periodic
benefit cost for fiscal years 2024, 2023 and 2022 was 4.70%, 3.30% and 2.70%, respectively.
 
Foreign Pension Plans
 Two of the Company’s foreign operations,
Schaublin and Swiss Tool, sponsor pension plans for their approximately 163 and 34 employees, respectively, in conformance with Swiss
pension law. The Schaublin plan is funded with an independent semi-autonomous collective provident foundation whereas the Swiss Tool plan
is funded with a reputable Swiss insurer. The unfunded liabilities of these plans at March 30, 2024 and April 1, 2023 were $2.3 and $1.5,
respectively, and recorded within other noncurrent liabilities on the consolidated balance sheets. For fiscal 2024, 2023 and 2022, net
periodic benefit cost for these plans was $2.0, $1.8 and $1.7, respectively.

 
401(k) Plans
 The Company has defined contribution plans under
Section 401(k) of the Internal Revenue Code for all of its employees not covered by a collective bargaining agreement. Employer contributions
under this plan, ranging from 10% - 100% of eligible amounts contributed by employees, amounted to $9.6, $8.6 and $4.6 in fiscal 2024,
2023 and 2022, respectively.

 
Supplemental Executive Retirement Plan
 The Company maintains a non-qualified Supplemental Executive Retirement Plan (“SERP”) for a select group of senior management employees. The SERP allows eligible employees to elect to defer up to 75% of their current salary and up to 100% of bonus compensation. As of March 30, 2024 and April 1, 2023, the SERP assets were $33.0 and $28.6, respectively, and are included within other noncurrent assets on the consolidated balance sheets. As of March 30, 2024 and April 1, 2023, the SERP liabilities were $29.9 and $25.7, respectively, and are included within other noncurrent liabilities on the consolidated balance sheets.

 
Defined Benefit Health Care Plans
 The Company, for the benefit of current and former
union employees at its Heim, West Trenton, Plymouth and PIC facilities and former union employees of its Tyson and Nice subsidiaries,
sponsors contributory defined benefit health care plans that provide postretirement medical and life insurance benefits to union employees
who have attained certain age and/or service requirements while employed by the Company. The plans are unfunded and costs are paid as
incurred. Postretirement benefit obligations were $2.2 and $2.4 at March 30, 2024 and April 1, 2023, respectively. Of these amounts, $0.2
is considered current and is included within accrued expenses and other current liabilities on the consolidated balance sheets as of both
March 30, 2024 and April 1, 2023. The remainder of the balances are included in other noncurrent liabilities in the consolidated balance
sheets. The Company also maintains a frozen defined benefit heath care plan for Dodge employees with postretirement benefit
obligations of $5.8 and $6.3 at March 30, 2024 and April 1, 2023, respectively. Of these amounts, $0.8 were considered current at both
March 30, 2024 and April 1, 2023. The amounts are included within the same balance sheet line items as other postretirement health care
plans maintained by the Company.

 


56
 

 
16. Income
Taxes 
 
Income before income taxes for the Company’s domestic
and foreign operations is as follows:
 


  
Fiscal Year Ended 

  
March 30, 2024   
April 1, 2023   
April 2, 2022  

Domestic 
 240.8  
$191.0  
$68.8 

Foreign 
 21.0  
 18.7  
 9.9 

Total income before income taxes 
$261.8  
$209.7  
$78.7 

 
The provision for income taxes consists of the
following:
 


  
Fiscal Year Ended 

  
March 30, 2024   
April 1, 2023   
April 2, 2022  

Current tax expense: 
   
   
  

Federal 
$53.1  
$53.0  
$18.3 

State 
 5.9  
 7.5  
 2.6 

Foreign 
 5.2  
 3.9  
 2.9 

  
 64.2  
 64.4  
 23.8 

Deferred tax expense: 
    
    
   

Federal 
 (9.3) 
 (20.0) 
 (0.5)

State 
 (4.3) 
 (2.6) 
 (0.3)

Foreign 
 1.3  
 1.2  
 1.0 

  
 (12.3) 
 (21.4) 
 0.2 

Total income taxes 
$51.9  
$43.0  
$24.0 

 
An analysis of the difference
between the provision for income taxes and the amount computed by applying the U.S. statutory income tax rate to pre-tax income follows:
 


  
Fiscal Year Ended 

  
March 30, 2024   
April 1, 2023   
April 2, 2022  

Income taxes using U.S. federal statutory rate 
$55.0  
$44.0  
$16.5 

State income taxes, net of federal benefit 
 0.8  
 3.9  
 1.9 

Stock-based compensation 
 (0.9) 
 (1.6) 
 (2.6)

Foreign rate differential 
 2.0  
 1.1  
 1.6 

Research and development credits 
 (2.5) 
 (2.4) 
 (1.5)

Company-owned life insurance 
 (0.8) 
 0.3  
 (0.0)

Foreign derived intangible income (FDII) 
 (3.3) 
 (2.7) 
 (1.5)

U.S. unrecognized tax positions 
 1.5  
 (1.9) 
 5.4 

Acquisition costs 
 0.0  
 0.0  
 1.7 

Valuation allowance 
 (1.7) 
 0.0  
 2.3 

Other - net 
 1.8  
 2.3  
 0.2 

  
$51.9  
$43.0  
$24.0 
 



57
 

 
Net deferred tax assets (liabilities) are comprised
of the following:
 


  
March 30, 2024   
April 1, 2023  

Deferred tax assets: 
   
  

Pension and postretirement benefits 
$1.5  
$1.8 

Employee compensation accruals 
 11.4  
 10.9 

Inventory 
 15.6  
 15.8 

Operating lease liabilities 
 8.0  
 7.8 

Finance lease liabilities 
 0.3  
 0.0 

Stock compensation 
 5.4  
 3.4 

Tax loss and credit carryforwards 
 11.5  
 12.5 

State tax 
 1.3  
 1.3 

Other accrued liabilities 
 8.1  
 8.9 

Capitalized research and development costs 
 16.4  
 8.1 

Other 
 0.4  
 5.1 

Total gross deferred tax assets 
 79.9  
 75.6 

Valuation allowance 
 (7.0) 
 (8.5)

Total deferred tax assets 
$72.9  
$67.1 

  
    
   

Deferred tax liabilities: 
    
   

Property, plant and equipment 
$(32.4) 
$(33.5)

Operating lease assets 
 (7.7) 
 (7.7)

Other 
 (3.7) 
 (3.3)

Intangible assets 
 (312.4) 
 (316.7)

Total deferred tax liabilities 
$(356.2) 
$(361.2)

  
    
   

Total net deferred liabilities 
$(283.3) 
$(294.1)

 The Company evaluates deferred tax assets to ensure
that the estimated future taxable income will be sufficient in character (i.e. capital versus ordinary income treatment), amount and timing
to result in their recovery. After considering the positive and negative evidence, a valuation allowance has been recorded on foreign
tax credits and on certain state and foreign credits and net operating losses as it is more likely than not (i.e., greater than
a 50% likelihood) that these items will not be utilized. For the Company’s fiscal year ended March 30, 2024 the valuation allowance
decreased by $1.5, which primarily related to the expiration of a capital loss carryforward. For the fiscal year ended April 1, 2023 the
valuation allowance decreased by less than $0.2. These valuation allowances are required because management has determined, based on financial
projections and available tax strategies, that it is unlikely the net operating losses and credits will be utilized before they expire.
If events or circumstances change, valuation allowances are adjusted at that time resulting in an income tax benefit or charge.

 At March 30, 2024, the Company had state net operating
loss carryovers in different jurisdictions at varying amounts up to $5.3, which expire at various dates through 2036. At March 30, 2024,
the Company had foreign net operating loss carryovers in different jurisdictions at varying amounts totaling $2.7, which will expire at
various dates through fiscal 2028. At March 30, 2024, the Company had U.S. federal and state credits in different jurisdictions at varying
amounts up to $11.0 which principally expire at various dates through 2038. At March 30, 2024, the Company had Canadian investment tax
credits up to $0.2 which will expire at various dates through 2038.

 Under
accounting standards (ASC 740) a deferred tax liability is not recorded for the excess of the tax basis over the financial reporting
(book) basis of an investment in a foreign subsidiary if the indefinite reinvestment criteria is met. The Tax Cuts and Jobs Act (TCJA)
required a mandatory deemed repatriation of certain undistributed earnings of the Company’s foreign subsidiaries as of December
31, 2017, and income taxes were accrued accordingly. If these deemed repatriated earnings were distributed in the form of cash dividends,
the Company would not be subject to additional U.S. income taxes, other than tax arising from the movement of foreign exchange rates
on previously taxed earnings, but could be subject to foreign income and withholding taxes. A provision had not been made for additional
U.S. and foreign taxes at March 30, 2024 on approximately $71.9 of undistributed earnings of foreign subsidiaries or for any additional
tax on the deemed repatriated earnings because the Company intends to reinvest these funds indefinitely to support foreign growth opportunities
and foreign operations. Due to the inherent complexity of the multinational tax environment in which the Company operates, it is not
practicable to estimate the unrecognized deferred tax liability on these undistributed earnings. These earnings could become subject
to additional tax under certain circumstances including, but not limited to, loans to the Company, or upon sale or pledging of the foreign
subsidiary’s stock. 
   


58
 

   
Uncertain Tax Positions
 
Unrecognized income tax benefits
represent income tax positions taken on income tax returns but not yet recognized in the consolidated financial statements. If recognized,
substantially all of the unrecognized tax benefits for the Company’s fiscal years ended March 30, 2024 and April 1, 2023 would affect
the effective income tax rate.
 
A reconciliation of the beginning and ending amount
of unrecognized tax benefits is as follows:
 


 
 

March 30,
2024
 
 

April 1,
2023
 
 

April 2,
2022
 

Balance, beginning of year
 
$
13.1
 
 
$
22.8
 
 
$
16.6
 

Gross increases (decreases) – tax positions taken during a prior period
 
 
2.0
 
 
 
(8.9
)
 
 
0.4
 

Gross increases – tax positions taken during the current period
 
 
1.7
 
 
 
1.7
 
 
 
7.6
 

Reductions due to lapse of the applicable statute of limitations
 
 
(1.6
)
 
 
(2.5
)
 
 
(1.8
)

Balance, end of year
 
$
15.2
 
 
$
13.1
 
 
$
22.8
 

 
The Company recognizes
the interest and penalties accrued related to unrecognized tax benefits in income tax expense. The Company recognized a benefit of
$0.3 for the fiscal year ended March 30, 2024 and expense of $0.1 and $0.1 related to interest and penalties on its statement of
operations for the fiscal years ended April 1, 2023 and April 2, 2022, respectively. The Company had approximately $1.2 and $1.5 of
accrued interest and penalties at March 30, 2024 and April 1, 2023, respectively.
 
The Company believes it is
reasonably possible that some of its unrecognized tax positions may be effectively settled by the end of the Company’s fiscal year
ending March 29, 2025, due to the closing of audits and the statute of limitations expiring in various jurisdictions. The decrease, pertaining
primarily to federal and state credits and state tax, is estimated to be $1.9.
 
The Company files income tax
returns in numerous U.S. and foreign jurisdictions, with returns subject to examination for varying periods, but generally back to and
including the fiscal year ending April 3, 2021, although certain tax credits generated in earlier years are open under statute from March
31, 2007. The Company is no longer subject to U.S. federal tax examination by the Internal Revenue Service for years ending before April
3, 2021.
 
17. Stockholders’
Equity
 
Preferred Stock
 
We are authorized to issue
10,000,000 shares of preferred stock, $0.01 par value per share, in one or more series and to fix the powers, designations, preferences
and relative participating, option or other rights thereof, including dividend rights, conversion rights, voting rights, redemption terms,
liquidation preferences and the number of shares constituting any series, without any further vote or action by our stockholders.
 
In fiscal 2022, we completed
an offering of 4,600,000 shares of MCPS in a public offering registered under the Securities Act of 1933. The trading symbol for the MCPS
on the New York Stock Exchange is “RBCP.” The net proceeds from the offering were approximately $445.3, after deducting underwriting
discounts and commissions and offering expenses, and were used to fund a portion of the purchase price for the acquisition of Dodge.
 
Holders of MCPS are entitled
to receive, when, as and if declared by our Board of Directors, or an authorized committee thereof, out of funds legally available for
payment, cumulative dividends at the annual rate of 5.00% of the liquidation preference of $100 per share, payable in cash or, subject
to certain limitations, by delivery of shares of common stock or any combination of cash and shares of common stock, at our election;
provided, however, that any unpaid dividends on the MCPS will continue to accumulate as described in the Certificate of Designations that
sets forth the rights, preferences and privileges of the MCPS. The Company made dividend payments of $5.7 on April 17, 2023, $5.8 on July
17, 2023, $5.8 on October 16, 2023, and $5.7 on January 15, 2024. The Company also had accrued $4.8 as of March 30, 2024 for dividends
that were paid on April 15, 2024.
 
The MCPS has a liquidation
preference of $100 per share plus accrued and unpaid dividends. As of March 30, 2024, the MCPS had an aggregate liquidation preference
of $464.8. 



59
 

 
Subject to certain exceptions,
no dividend or distribution will be declared or paid on shares of our common stock, and no common stock will be purchased, redeemed or
otherwise acquired for consideration by us or any of our subsidiaries unless, in each case, all accumulated and unpaid dividends for all
preceding dividend periods have been declared and paid, or a sufficient amount of cash or number of shares of common stock has been set
apart for the payment of such dividends, on all outstanding shares of MCPS. In the event of our voluntary or involuntary liquidation,
winding-up or dissolution, no distribution of our assets may be made to holders of our common stock until we have paid holders of MCPS,
each of which will be entitled to receive a liquidation preference in the amount of $100 per share plus accumulated and unpaid dividends.
 
Unless earlier converted or
redeemed, each share of MCPS will automatically convert, for settlement on or about October 15, 2024, into between 0.4413 and 0.5405 shares
of common stock, subject to customary anti-dilution adjustments. The conversion rate that will apply to mandatory conversions will be
determined based on the average of the daily volume-weighted average prices over the 20 consecutive trading days beginning on, and including,
the 21st scheduled trading day immediately before October 15, 2024. The conversion rate applicable to mandatory conversions may in certain
circumstances be increased to compensate holders of the MCPS for certain unpaid accumulated dividends.
 
Common Stock
 
We are authorized to issue
60,000,000 shares of common stock, $0.01 par value per share. Holders of common stock are entitled to one vote per share. Holders of common
stock are entitled to receive dividends, if and when declared by our Board of Directors, and to share ratably in our assets legally available
for distribution to our stockholders in the event of liquidation after giving effect to any liquidation preference for the benefit of
the MCPS or any other preferred stock then outstanding. Holders of common stock have no preemptive, subscription, redemption, or conversion
rights. The holders of common stock do not have cumulative voting rights. The holders of a majority of the shares of common stock can
elect all of the directors and can control our management and affairs.
 
In fiscal 2022 we completed an offering of
3,450,000 shares of common stock in a public offering registered under the Securities Act of 1933 at an offering price of $185 per share.
The net proceeds from the offering were approximately $605.5, after deducting underwriting discounts and commissions and offering expenses,
and were used to fund a portion of the purchase price for the acquisition of Dodge.
 
Long-Term Equity Incentive Plans
 
The Company’s long-term
equity incentive plans (the “Equity Plans”) provide for grants of stock options, stock appreciation rights, restricted stock
and performance awards to directors, officers and other employees and persons who engage in services for the Company. The purpose of
the Equity Plans is to provide these individuals with incentives to maximize stockholder value and otherwise contribute to the Company’s
success and to enable the Company to attract, retain and reward the best available persons for positions of responsibility. 1,500,000
shares of common stock were authorized for issuance under each Equity Plan when it was adopted, subject to adjustment in the event of
a reorganization, stock split, merger or similar change in the Company’s corporate structure or in the outstanding shares of common
stock. The Company’s Compensation Committee administers the Equity Plans, although the Company’s Board of Directors also
has the authority to administer the Equity Plans and to take all actions that the Compensation Committee is otherwise authorized to take
under the Equity Plans. The terms and conditions of each award made under an Equity Plan, including vesting requirements, are set forth
in a written agreement with the recipient that is consistent with the terms of the relevant Equity Plan. As of March 30, 2024 the Company’s
long-term equity incentive plans were as follows: the 2013 Equity Plan, which expired in 2023 although stock options awarded under this
plan are still outstanding; the 2017 Equity Plan, which expires in 2027; and the 2021 Equity Plan, which expires in 2031. As of March
30, 2024 there were 272,328 and 1,500,000 shares available for future awards under the 2017 and 2021 Equity plans, respectively. 


60
 

 
Stock Options. Under
the Equity Plans, the Compensation Committee or the Board may approve the award of non-qualified stock options. The Compensation Committee
also has the authority to approve the grant of options that will become fully vested and exercisable automatically upon a change in control.
The Compensation Committee may not, however, approve an award to any one person (other than Dr. Michael J. Hartnett) in any calendar year
for options to purchase common stock equal to more than 10% of the total number of shares authorized under the relevant Equity Plan. The
Compensation Committee will approve the exercise price and term of any option in its discretion; however, the exercise price may not be
less than 100% of the fair market value of a share of common stock on the date of grant. The Equity Plans also authorize the Compensation
Committee to award incentive stock options conforming to the requirements of Section 422 of the Internal Revenue Code, but to date no
such options have been awarded. As of March 30, 2024, there were 8,272 outstanding options under the 2013 Equity Plan, all of which were
exercisable, 497,620 outstanding options under the 2017 Equity Plan, 233,440 of which were exercisable, and no outstanding option under
the 2021 Equity Plan.
 
Restricted Stock. Under
the Equity Plans, the Compensation Committee may approve the award of restricted stock subject to the conditions and restrictions, and
for the duration that it determines in its discretion. Under each of the 2017 and 2021 Equity Plans, the number of shares that may be
used for restricted stock awards may not exceed 50% of the total authorized number of shares under that Equity Plan. As of March 30, 2024,
there were zero, 173,445 and zero shares of restricted stock outstanding under the 2013, 2017 and 2021 Equity Plans, respectively.
 
Performance Awards.
The Compensation Committee may approve performance awards contingent upon achievement by the recipient, or by the Company, of set goals
and objectives regarding specified performance criteria, over a specified performance cycle. Awards may include specific dollar-value
target awards, performance units the value of which is established at the time of grant, and/or performance shares the value of which
is equal to the fair market value of a share of common stock on the date of grant. The value of a performance award may be fixed or fluctuate
on the basis of specified performance criteria. A performance award may be paid out in cash and/or shares of common stock or other securities.
Certain senior executive officers receive performance awards in the form of stock options, restricted stock and/or unrestricted stock.
 
Stock Appreciation Rights.
The Compensation Committee may approve the grant of stock appreciation rights, or SARs, subject to the terms and conditions contained
in the Equity Plans. The exercise price of an SAR must equal the fair market value of a share of the Company’s common stock on the
date the SAR is granted. Upon exercise of an SAR, the grantee will receive an amount in shares of our common stock equal to the difference
between the fair market value of a share of common stock on the date of exercise and the exercise price of the SAR, multiplied by the
number of shares as to which the SAR is exercised. There were no SARs issued or outstanding under the Plans as of March 30, 2024. 



61
 

 
Amendment and Termination
of the Equity Plans. Except as otherwise provided in an award agreement, the Board of Directors, without approval of the stockholders,
may amend or terminate any Equity Plan, except that no amendment will become effective without prior approval of the stockholders of the
Company if stockholder approval would be required by applicable law or regulations, including if required (i) under the provisions of
Section 409A or any successor thereto, (ii) under the provisions of Section 422 of the Code or any successor thereto, or (iii) by any
listing requirement of the principal stock exchange on which the common stock is then listed. Subject to the provisions of an award agreement,
which may be more restrictive, no termination of an Equity Plan may materially and adversely affect any of the rights or obligations of
any award recipient, without his or her written consent, under any award of options or other incentives previous granted under the relevant
Equity Plan.
 
A summary of the status of
the Company’s stock options outstanding as of March 30, 2024 and changes during the year then ended is presented below. All cashless exercises
of options are handled through an independent broker.
 


  
Number Of Common Stock Options  
Weighted Average Exercise Price
    Per Share  
Weighted Average Contractual Life (Years)  
Intrinsic Value 

Outstanding, April 1, 2023 
 623,635  
$153.95  
     3.7  
$  49.2 

Awarded 
 54,820  
 215.97  
    
   

Exercised 
 (168,321) 
 120.48  
    
   

Forfeitures 
 (4,000) 
 208.85  
    
   

Expirations 
 (242) 
 136.46  
    
   

Outstanding, March 30, 2024 
 505,892  
$171.38  
 3.6  
$50.1 

  
    
    
    
   

Exercisable, March 30, 2024 
 241,712  
$155.39  
 2.8  
$27.8 

 
The fair value for the Company’s
options was estimated at the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions,
which are updated to reflect current expectations of the dividend yield, expected life, risk-free interest rate and using historical volatility
to project expected volatility:
 


 
 
Fiscal Year Ended
 

 
 

March 30,
2024
 
 

April 1,
2023
 
 

April 2,
2022
 

Dividend yield
 
 
0.00
%
 
 
0.00
%
 
 
0.00
%

Expected weighted-average life (yrs.)
 
 
5.0
 
 
 
5.0
 
 
 
5.0
 

Risk-free interest rate
 
 
4.20
%
 
 
3.05
%
 
 
0.95
%

Expected volatility
 
 
46.71
%
 
 
45.57
%
 
 
43.43
%

 
The weighted average fair
value per share of options granted was $99.92 in fiscal 2024, $90.39 in fiscal 2023 and $76.65 in fiscal 2022.
 
The Company recorded $2.6
(net of taxes of $0.8) in compensation expense in fiscal 2024 related to option awards. As of March 30, 2024, there was $9.9 of unrecognized
compensation costs related to options which is expected to be recognized over a weighted average period of 3.5 years. The total intrinsic
value of options exercised in fiscal 2024, 2023 and 2022 was $22.9, $16.9 and $11.9, respectively.
 
Of the total awards outstanding
at March 30, 2024, 503,132 were either fully vested or are expected to vest. These shares have a weighted average exercise price of $171.19,
an intrinsic value of $49.9 and a weighted average contractual term of 3.6 years. 



62
 

 

A summary of the status of the
Company’s restricted stock outstanding as of March 30, 2024 and the changes during the year then ended is presented below.
 


  
Number Of Restricted
 Stock Shares  
Weighted-Average Grant Date 
Fair Value 

Non-vested, April 1, 2023 
 192,124  
$    186.67 

Granted 
 71,448  
 205.50 

Vested 
 (87,854) 
 177.26 

Forfeitures 
 (2,273) 
 194.19 

Non-vested, March 30, 2024 
 173,445  
$199.09 

 
The weighted average fair
value per share of restricted stock granted was $205.50 in fiscal 2024, $201.60 in fiscal 2023 and $198.04 in fiscal 2022.
 
The Company recorded $8.9
(net of taxes of $2.6) in compensation expense in fiscal 2024 related to restricted stock awards. These awards were valued at the fair
market value of the Company’s common stock on the date of issuance and are being amortized as expense over the applicable vesting
period. The total fair value of restricted stock awards that vested during fiscal 2024, 2023, and 2022 was $19.2, $21.2 and $22.1, respectively.
Unrecognized expense for restricted stock was $18.9 at March 30, 2024. This cost is expected to be recognized over a weighted average
period of approximately 2.6 years.
 
A
summary of the status of the Company’s liability classified awards outstanding as of March 30, 2024 and the changes during the year
then ended is presented below.
 


  
Intrinsic
 Value 

Outstanding, April 1, 2023 
$            — 

Awarded 
 11.7 

Vested 
 — 

Cancelled 
 — 

Change in fair value 
 — 

Outstanding, March 30, 2024 
$11.7 

  
   

Estimated liability as of March 30, 2024 
$2.5 

 
The Company recorded $1.9
(net of taxes of $0.6) in stock-based compensation expense in fiscal 2024 related to liability awards. As of March 30, 2024, $2.0 and
$0.5 was included in other noncurrent liabilities and other current liabilities, respectively. As of March 30, 2024 there was $9.2 of
unrecognized compensation costs related to liability awards which is expected to be recognized over a weighted average period of 3.1
years. The total intrinsic value of liability classified awards vested in fiscal 2024, 2023 and 2022 was $0.0, $0.0 and $0.0, respectively.
 
18.  Commitments
and Contingencies
 
As of March 30, 2024, approximately
5% of the Company’s hourly employees in the U.S. and abroad were represented by labor unions.
 
The Company enters into U.S.
government contracts and subcontracts that are subject to audit by the U.S. government. In the opinion of the Company’s management, the
results of such audits, if any, are not expected to have a material impact on the cash flows, financial condition or results of operations
of the Company.
 
For fiscal 2024, 2023 and
2022, there were no audits by the U.S. government, the results of which, in the opinion of the Company’s management, had a material
impact on the cash flows, financial condition or results of operations of the Company.
 
The Company is subject to
federal, state and local environmental laws and regulations, including those governing discharges of pollutants into the air and water,
the storage, handling and disposal of wastes and the health and safety of employees. The Company also may be liable under the Comprehensive
Environmental Response, Compensation, and Liability Act or similar state laws for the costs of investigation and cleanup of contamination
at facilities currently or formerly owned or operated by the Company, or at other facilities at which the Company may have disposed of
hazardous substances. In connection with such contamination, the Company may also be liable for natural resource damages, U.S. government
penalties and claims by third parties for personal injury and property damage. Agencies responsible for enforcing these laws have authority
to impose significant civil or criminal penalties for non-compliance. The Company believes it is currently in material compliance with
all applicable requirements of environmental laws. The Company does not anticipate material capital expenditures for environmental compliance
in fiscal years 2025 or 2026. 



63
 

 

Investigation and remediation
of contamination is ongoing at some of the Company’s sites. In particular, state agencies have been overseeing groundwater monitoring
activities at the Company’s facility in Hartsville, South Carolina. At Hartsville, the Company is monitoring low levels of contaminants
in the groundwater caused by former operations. Plans are currently underway to conclude remediation and monitoring activities. In connection
with the purchase of the Fairfield, Connecticut facility in 1996, the Company agreed to assume responsibility for completing clean-up
efforts previously initiated by the prior owner. The Company submitted data to the state that the Company believes demonstrates that
no further remedial action is necessary, although the state may require additional clean-up or monitoring.
 
On March 9, 2022 and March
21, 2023, the Company received civil investigative demands from the United States Department of Justice pursuant to the False Claims
Act, 31 U.S.C. § 3733 (the “FCA”). The investigation concerns allegations that the Company submitted false claims in
connection with (i) certifying that the Company’s employees were eligible for unemployment insurance benefits and pandemic relief
and worked reduced hours and (ii) received grant proceeds in violation of the FCA. The Company is cooperating with the investigation.
As the investigation is in its early stages, it is not possible to determine whether the investigation will have a material adverse effect,
if any, on the Company.
 
Besides the matter described
in the previous paragraph, from time to time we are involved in litigation that arises in the ordinary course of business, but we do
not believe that any such litigation in which we are currently involved, either individually or in the aggregate, is likely to have a
material adverse effect on our business, financial condition, operating results, cash flow or prospects.
 
The Company has $3.7 of outstanding
standby letters of credit, all of which are under the Revolving Credit Facility. We also have a contractual obligation for licenses related
to the implementation and upgrade of an ERP system. The remaining contractual obligation related
to these ERP license costs of $7.6 will end in June of 2026.
 
19. Other, Net
 
Other, net is comprised of
the following:
 


  
Fiscal Year Ended 

  
March
                                            30, 2024   
April
                                            1, 2023   
April
                                            2, 2022  

Plant consolidation and restructuring costs	 
$2.7  
$2.5  
$1.1 

Acquisition costs and transition services	 
 0.3  
 8.9  
 30.6 

Provision for doubtful accounts	 
 0.2  
 0.8  
 0.5 

Amortization of intangibles 	 
 70.4  
 69.1  
 34.7 

Loss on disposal of assets 	 
 0.6  
 0.3  
 0.3 

Other expense	 
 0.6  
 0.5  
 1.2 

  
$74.8  
$82.1  
$68.4 

 
20. Reportable Segments
 
The Company operates through
operating segments and reports its financial results based on how its chief operating decision maker makes operating decisions, assesses
the performance of the business, and allocates resources. Our operating segments are our reportable segments. These reportable segments
are Aerospace/Defense and Industrial and are described below.
 
Aerospace/Defense.
This segment represents the end markets for the Company’s highly engineered bearings and precision components used in commercial
aerospace, defense aerospace, and sea and ground defense applications.
 
Industrial.
This segment represents the end markets for the Company’s highly engineered bearings and precision components used in various industrial
applications including: power transmission; construction, mining, energy and specialized equipment manufacturing; semiconductor production
equipment manufacturing; agricultural machinery, commercial truck and automotive manufacturing; and tool holding. 



64
 

 
The accounting policies of
the reportable segments are the same as those described in Note 2. Segment performance is evaluated based on segment net sales and
gross margin. Items not allocated to segment operating income include corporate administrative expenses and certain other amounts. Where
not separately disclosed, corporate costs are allocated to each segment. Identifiable assets by reportable segment consist of those directly
identified with the segment’s operations.
 


  
Fiscal
    Year Ended 

  
March
                                            30, 2024  
April
                                            1, 2023  
April
                                            2, 2022 

Net
    External Sales 
   
   
  

Aerospace/Defense 
$519.4  
$430.3  
$381.5 

Industrial 
 1,040.9  
 1,039.0  
 561.4 

  
$1,560.3  
$1,469.3  
$942.9 

  
    
    
   

Gross
    Margin 
    
    
   

Aerospace/Defense 
$208.8  
$171.0  
$155.1 

Industrial 
 461.7  
 433.8  
 202.0 

  
$670.5  
$604.8  
$357.1 

  
    
    
   

Selling,
    General and Administrative Expenses 
    
    
   

Aerospace/Defense 
$37.8  
$31.1  
$29.0 

Industrial 
 132.8  
 122.5  
 58.6 

Corporate 
 82.9  
 76.1  
 80.0 

  
$253.5  
$229.7  
$167.6 

  
    
    
   

Operating
    Income 
    
    
   

Aerospace/Defense 
$161.7  
$132.7  
$117.8 

Industrial 
 272.6  
 236.5  
 107.5 

Corporate 
 (92.1) 
 (76.2) 
 (104.2)

  
$342.2  
$293.0  
$121.1 

  
    
    
   

Total Assets 
    
    
   

Aerospace/Defense 
$798.6  
$749.8  
$776.5 

Industrial 
 3,779.6  
 3,845.7  
 3,920.9 

Corporate 
 100.4  
 94.9  
 148.0 

  
$4,678.6  
$4,690.4  
$4,845.4 

  
    
    
   

Capital
    Expenditures 
    
    
   

Aerospace/Defense 
$10.6  
$9.5  
$7.5 

Industrial 
 20.4  
 29.1  
 19.3 

Corporate 
 2.2  
 3.4  
 3.0 

  
$33.2  
$42.0  
$29.8 

  
    
    
   

Depreciation
    & Amortization 
    
    
   

Aerospace/Defense 
$19.6  
$18.6  
$19.1 

Industrial 
 96.3  
 93.4  
 43.1 

Corporate 
 3.4  
 3.4  
 3.3 

  
$119.3  
$115.4  
$65.5 

  
    
    
   

Geographic
    External Sales 
    
    
   

Domestic 
$1,375.4  
$1,292.9  
$833.4 

Foreign 
 184.9  
 176.4  
 109.5 

  
$1,560.3  
$1,469.3  
$942.9 

  
    
    
   

Geographic
    Long-Lived Assets 
    
    
   

Domestic 
$341.5  
$360.7  
$373.0 

Foreign 
 60.9  
 56.0  
 58.2 

  
$402.4  
$416.7  
$431.2 

 


65
 

 
21. Related Party Transactions
 
Equity Method Investee
 
The Company has a joint venture
in North America focused on joint logistics and e-business services. This joint venture, CoLinx, LLC (“CoLinx”), includes
five equity members: Timken, SKF Group, Schaeffler Group, Gates Industrial Corp. and the Company. The e-business service focuses on information
and business services for authorized distributors in the Industrial segment. Total expenses for services provided by CoLinx for the fiscal
years ended March 30, 2024, April 1, 2023 and April 2, 2022 were $18.5, $18.4 and $7.2, respectively, and were included within selling,
general and administrative costs on the consolidated statements of operations. Amounts outstanding in respect of these transactions were
payables of $0.7 and $1.8 as of March 30, 2024 and April 1, 2023, respectively, and were included within accounts payable on the consolidated
balance sheets. No dividends were received from CoLinx during the periods presented. The Company does not have any other equity method
investees. The Company does not have any other significant related-party transactions.
 
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
 
None.
 
ITEM 9A. CONTROLS AND PROCEDURES 
 
Evaluation of Disclosure Controls and Procedures
 
The Company’s management
is responsible for establishing and maintaining effective disclosure controls and procedures, as defined under Rule 13a-15(e) of the
Securities Exchange Act of 1934. As of the end of the period covered by this report, the Company performed an evaluation, under the supervision
and with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the Company’s disclosure controls and procedures. In making its assessment, management has utilized the criteria
set forth by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission in Internal Control — Integrated Framework
(2013 Framework). Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that
the Company’s disclosure controls and procedures provide reasonable assurance that the material information required to be disclosed
by the Company in the reports that it files or submits to the Securities and Exchange Commission under the Securities Exchange Act of
1934 is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms. The
Company’s management believes that its disclosure controls and procedures were effective as of March 30, 2024.
 
Changes in Internal Control Over Financial
Reporting
 
No changes were made to the
Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) during
the last fiscal quarter that materially affected, or are reasonably likely to materially affect, the Company’s internal control
over financial reporting.
 
Management’s Report on Internal Control
Over Financial Reporting
 
Management of RBC Bearings
Incorporated is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined
in Securities Exchange Act of 1934.
 
The Company’s internal
control over financial reporting is supported by written policies and procedures that (i) pertain to the maintenance of records that,
in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company’s assets; (ii) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of the
Company’s management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.
 
Because of its inherent limitations,
internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to
future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
 
Under the supervision and
with the participation of our management, including our principal executive officer and principal financial officer, we conducted an
evaluation of the effectiveness of the Company’s internal control over financial reporting as of March 30, 2024 as required by
Securities Exchange Act of 1934. In making this assessment, we used the criteria set forth in the framework in Internal Control-Integrated
Framework (2013 Framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation
under the framework in Internal Control-Integrated Framework, our management concluded that our internal control over financial
reporting was effective as of March 30, 2024.
 
The effectiveness of our
internal control over financial reporting as of March 30, 2024 has been audited by Ernst & Young LLP, an independent registered public
accounting firm, as stated in their report which appears on the following page.
 
/s/ RBC Bearings Incorporated
 
Oxford, Connecticut
May 17, 2024
 


66
 

 
Report of Independent Registered Public Accounting
Firm
 
To the Stockholders and the Board of Directors
of RBC Bearings Incorporated
 
Opinion on Internal Control Over Financial
Reporting 
 
We have audited RBC Bearings Incorporated’s
internal control over financial reporting as of March 30, 2024, based on criteria established in Internal Control—Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion,
RBC Bearings Incorporated (the Company) maintained, in all material respects, effective internal control over financial reporting as
of March 30, 2024, based on the COSO criteria.
 
We also have audited, in accordance with the
standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as
of March 30, 2024 and April 1, 2023, the related consolidated statements of operations, comprehensive income, stockholders’ equity
and cash flows for each of the three years in the period ended March 30, 2024 and the related notes and our report dated May 17, 2024
expressed an unqualified opinion thereon. 
 
Basis for Opinion 
 
The Company’s management is responsible
for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over
financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility
is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting
firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
 
We conducted our audit in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material respects.
 
Our audit included obtaining an understanding
of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary
in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
 
Definition and Limitations of Internal Control
Over Financial Reporting 
 
A company’s internal control over financial
reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal
control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance
that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and
directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition,
use, or disposition of the company’s assets that could have a material effect on the financial statements.
 
Because of its inherent limitations, internal
control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
 
/s/ Ernst & Young LLP
 
Stamford, Connecticut
May 17, 2024
 


67
 

 
ITEM 9B. OTHER INFORMATION
 
During the quarter ended March 30, 2024 no director or officer of the
Company adopted or terminated a Rule 10b5-1 trading plan or non-Rule 10b5-1 trading arrangement.
 
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS
THAT PREVENT INSPECTIONS
 
Not applicable.
 


68
 

 
PART III
 
The information called for
by Part III, Items 10, 11, 12, 13 and 14 of Form 10-K will be included in the Company’s Proxy Statement for its 2024 Annual Meeting
of Shareholders, which the Company intends to file within 120 days after the close of its fiscal year ended March 30, 2024, and which
is incorporated herein by reference.
 


69
 

 
PART IV
 
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT
SCHEDULES
 

(a)(1)The following Consolidated Financial
                                            Statements and Supplementary Data of the Company are included in Item 8, “Financial
                                            Statements and Supplementary Data” of this Annual Report on Form 10-K:
 

●Report
                                            of Independent Registered Public Accounting Firm;
 

●Consolidated
                                            Balance Sheets at March 30, 2024 and April 1, 2023;
 

●Consolidated
                                            Statements of Operations for the fiscal years ended March 30, 2024, April 1, 2023 and April
                                            2, 2022;
 

●Consolidated
                                            Statements of Comprehensive Income for the fiscal years ended March 30, 2024, April 1, 2023
                                            and April 2, 2022;
 

●Consolidated
                                            Statements of Stockholders’ Equity for the fiscal years ended March 30, 2024, April
                                            1, 2023 and April 2, 2022;
 

●Consolidated
                                            Statements of Cash Flows for the fiscal years ended March 30, 2024, April 1, 2023 and April
                                            2, 2022; and
 

●Notes
                                            to Consolidated Financial Statements.
 

(2)For a list of the Company’s Financial
                                            Statement Schedules, see Item 15(c) of this Annual Report on Form 10-K.
 

(3)For a list of the exhibits
                                            required by Regulation S-K, see Item 15(b) of this Annual Report on Form 10-K.

 

(b)The Exhibits required
                                            by Item 601 of Regulation S-K are filed as exhibits to this Annual Report on Form 10-K and
                                            indexed below immediately following Item 15(c), which index is incorporated herein by reference.

 

(c)All Financial Statement
                                            Schedules are included in the Financial Statements and Supplementary Data under Item 15(a)(1)
                                            of this Annual Report on Form 10-K and incorporated herein by reference.

 


70
 

 
Exhibit Index
 
The following exhibits are
filed as part of this Annual Report on Form 10-K. The exhibits that are indicated below as having been previously filed by RBC Bearings
Incorporated with the SEC are incorporated herein by reference. Our Commission file number is 001-40840.
 


Exhibit
    Number
 
Description
    of Document 

 
 
 

3.1
 
Amended
    and Restated Certificate of Incorporation of RBC Bearings Incorporated dated August 13, 2005 (filed with Amendment No. 4 to Registration
    Statement on Form S-1 dated August 8, 2005).

3.2
 
Amended
    and Restated Bylaws of RBC Bearings Incorporated (filed as Exhibit 3.1 to Current Report on Form 8-K dated September 15, 2017).

4.1
 
Description of Capital Stock (filed as Exhibit 4.1 to Annual Report on Form 10-K dated May 26, 2022).

4.2
 
Form
    of stock certificate for common stock (filed as Exhibit 4.3 to Amendment No. 3 to Registration Statement on Form S-1 dated August
    4, 2005).

4.3
 
Certificate
    of Designation for 5.00% Series A Mandatory Convertible Preferred Stock (filed as Exhibit 3.1 to Current Report on Form 8-K dated
    September 24, 2021).

4.4
 
Form
    of stock certificate for 5.00% Series A Mandatory Convertible Preferred Stock (filed as Exhibit 4.1 to Current Report on Form 8-K
    dated September 24, 2021)

4.5
 
Indenture,
    dated as of October 7, 2021, by and among Roller Bearing Company of America, Inc. and Wilmington Trust, National Association for
    4.375% Senior Notes due 2029 (filed as Exhibit 4.1 to Current Report on Form 8-K dated October 7, 2021).

4.6
 
Form
    of 4.375% Senior Notes due 2029 (filed as Exhibit 4.2 to Current Report on Form 8-K dated October 7, 2021).

10.1
 
Amended
    and Restated Employment Agreement, dated as of June 3, 2022, between RBC Bearings Incorporated and Michael J. Hartnett, Ph.D. (filed
    as Exhibit 10.1 to Current Report on Form 8-K dated June 9, 2022).

10.2
 
Amendment
    No. 1, dated as of August 1, 2022, to Amended and Restated Employment Agreement, dated as of June 3, 2022, between RBC Bearings Incorporated
    and Dr. Michael J. Hartnett (filed as Exhibit 10.1 to Current Report on Form 8-K dated August 4, 2022). 

10.3
 
Amended
    and Restated Employment Agreement, dated as of June 3, 2022, between RBC Bearings Incorporated and Daniel A. Bergeron (filed as Exhibit
    10.2 to Current Report on Form 8-K dated June 9, 2022).

10.4
 
Amendment
    No. 1, dated as of August 1, 2022, to Amended and Restated Employment Agreement, dated as of June 3, 2022, between RBC Bearings Incorporated
    and Daniel A. Bergeron (filed as Exhibit 10.2 to Current Report on Form 8-K dated August 4, 2022).

10.5
 
Form
    of Change in Control Letter Agreement for Named Executive Officers (filed as Exhibit 10.1 to Quarterly Report on Form 10-Q dated
    February 1, 2010).

10.6
 
RBC
    Bearings Incorporated Executive Officer Performance Based Compensation Plan (filed as Exhibit 10.1 to Current Report on Form 8-K
    dated July 27, 2017).

10.7
 
RBC
    Bearings Incorporated Amended and Restated 2013 Long Term Incentive Plan (filed as Exhibit 10.1 to Current Report on Form 8-K dated
    August 21, 2013).

10.8
 
RBC
    Bearings Incorporated 2017 Long-Term Equity Incentive Plan (filed as Exhibit 10.2 to Current Report on Form 8-K dated July 27, 2017).

10.9
 
RBC
    Bearings Incorporated 2021 Long-Term Equity Incentive Plan (filed as Exhibit 10.1 to Current Report on Form 8-K dated September 10,
    2021).

 


71
 

 



10.10
 
Credit
    Agreement, dated November 1, 2021, by and among Roller Bearing Company of America, Inc. as Borrower, RBC Bearings Incorporated, Wells
    Fargo Bank, National Association, as Administrative Agent, Collateral Agent, Swingline Lender, and Letter of Credit Issuer, and various
    lenders signatory thereto (filed as Exhibit 10.1 to Current Report on Form 8-K dated November 2, 2021).

10.11
 
Guarantee,
    dated November 1, 2021, by and among RBC Bearings Incorporated and the subsidiary guarantors party thereto in favor of Wells Fargo
    Bank, National Association, as Collateral Agent (filed as Exhibit 10.2 to Current Report on Form 8-K dated November 2, 2021).

10.12
 
Security
    Agreement, dated November 1, 2021, by and between Roller Bearing Company of America, Inc., RBC Bearings Incorporated, the subsidiary
    grantors party thereto and Wells Fargo Bank, National Association, as Collateral Agent for its benefit and the benefit of the Secured
    Parties (filed as Exhibit 10.3 to Current Report on Form 8-K dated November 2, 2021).

10.13
 
Pledge
    Agreement, dated November 1, 2021, by and between Roller Bearing Company of America, Inc., RBC Bearings Incorporated, the subsidiary
    pledgors party thereto and Wells Fargo Bank, National Association, as Collateral Agent for the benefit of the Secured Parties (filed
    as Exhibit 10.4 to Current Report on Form 8-K dated November 2, 2021).

10.14
 
Stock
                                    and Asset Purchase Agreement, dated as of July 24, 2021, by and between ABB Asea Brown Boveri Ltd.
                                    as Seller and RBC Bearings Incorporated as Purchaser (filed as Exhibit 2.1 to Current Report on Form
                                    8-K dated July 26, 2021).

10.15
 
First
    Amendment to Credit Agreement, dated as of December 5, 2022, by and among Roller Bearing Company of America, Inc., RBC Bearings Incorporated,
    Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto (filed as Exhibit 10.01 to Current
    Report on Form 8-K dated December 7, 2022).

19
 
RBC Bearings Incorporated Insider Trading Policy.

21
 
Subsidiaries of the Registrant.

23
 
Consent of Ernst & Young LLP.

31.1
 
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2
 
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1
 
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

32.2
 
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

97
 
RBC Bearings Incorporated Clawback Policy.

101.INS
 
Inline
    XBRL Instance Document.

101.SCH
 
Inline
    XBRL Taxonomy Extension Schema Document.

101.CAL
 
Inline
    XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF
 
Inline
    XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB
 
Inline
    XBRL Taxonomy Extension Label Linkbase Document.

101.PRE
 
Inline
    XBRL Taxonomy Extension Presentation Linkbase Document.

104
 
Cover
    Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

 

*This certification is not
                                            deemed filed with the SEC and is not to be incorporated by reference into any of our filings
                                            under the Securities Act of 1933 or the Securities Exchange Act of 1934 (whether made before
                                            or after the date of this Annual Report on Form 10-K) irrespective of any general incorporation
                                            language contained in such filing.

 


72
 

 
SIGNATURES
 
Pursuant to the requirements
of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf
by the undersigned, thereunto duly authorized.
 


 
RBC Bearings Incorporated

 
 
(Registrant)

 
 
 

 
By:
/s/ Michael
    J. Hartnett

 
 
Name: 
Michael J. Hartnett

 
 
Title:
Chief Executive Officer

 
 
Date:
May 17, 2024

 
Pursuant to the requirements
of the Securities Exchange Act of 1934, this Report has been signed by the following persons on behalf of the Registrant and in the capacities
and on the dates indicated.
 


Signature
 
Title
 

 
 
 
 

/s/
    Michael J. Hartnett
 
Chairman, President
    and Chief Executive Officer
 

Michael J. Hartnett
    
 
(principal executive
    officer and chairman)
 

Date: May 17,
    2024
 
 
 

 
 
 
 

/s/
    Daniel A. Bergeron
 
Chief Operating
    Officer
 

Daniel A. Bergeron
 
 
 

Date: May 17,
    2024
 
 
 

 
 
 
 

/s/
    Robert M. Sullivan
 
Chief Financial
    Officer (principal financial officer)
 

Robert M. Sullivan
 
 
 

Date: May 17,
    2024
 
 
 

 
 
 
 

/s/
    Matthew J. Tift
 
Corporate Controller
 

Matthew J. Tift
 
 
 

Date: May 17,
    2024
 
 
 

 
 
 
 

/s/
    Richard R. Crowell
 
Director
 

Richard R. Crowell
 
 
 

Date: May 17,
    2024
 
 
 

 
 
 
 

/s/
    Dolores J. Ennico
 
Director
 

Dolores J. Ennico
 
 
 

Date: May 17,
    2024
 
 
 

 
 
 
 

/s/
    Edward D. Stewart
 
Director
 

Edward D. Stewart
 
 
 

Date: May 17,
    2024
 
 
 

 
 
 
 

/s/
    Dr. Steven H. Kaplan
 
Director
 

Dr. Steven H.
    Kaplan
 
 
 

Date: May 17,
    2024
 
 
 

 
 
 
 

/s/
    Michael H. Ambrose
 
Director
 

Michael H. Ambrose
 
 
 

Date: May 17,
    2024
 
 
 

 
 
 
 

/s/
    Dr. Amir Faghri
 
Director
 

Dr. Amir Faghri
 
 
 

Date: May 17,
    2024
 
 
 

 
 
73
 
 


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http://fasb.org/us-gaap/2024#OperatingLeaseRightOfUseAsset
http://fasb.org/us-gaap/2024#OperatingLeaseRightOfUseAsset
http://fasb.org/us-gaap/2024#PropertyPlantAndEquipmentNet
http://fasb.org/us-gaap/2024#PropertyPlantAndEquipmentNet
http://fasb.org/us-gaap/2024#OperatingLeaseLiabilityCurrent
http://fasb.org/us-gaap/2024#OperatingLeaseLiabilityCurrent
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